Sunk Costs Include Any Cost That

question 47

Multiple Choice

Sunk costs include any cost that:

• A) will change if a project is undertaken.
• B) will be incurred if a project is accepted.
• C) has previously been incurred and cannot be changed.
• D) is paid to a third party and cannot be refunded for any reason whatsoever.
• E) will occur if a project is accepted and once incurred, cannot be recouped.

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Definitions:

Plantwide Overhead Rate

A single overhead rate calculated by dividing total factory overhead by the total amount of a chosen allocation base, applied uniformly across all production.

Activity-based Costing (ABC)

A costing method that assigns overhead and indirect costs to related products and services based on their usage.

Overhead Rates

The ratio used to allocate indirect costs to products or services, usually based on direct labor hours, machine hours, or direct labor cost.

Square-foot

A unit of area measurement equal to a square measuring one foot on each side, commonly used in real estate and architecture.