If a Company Decides to Outsource and Then Has Freed

question 141

Multiple Choice

If a company decides to outsource and then has freed capacity, the decision on what to do with that freed capacity would be based upon

• A) fixed cost allocation.
• B) unavoidable fixed costs.
• C) opportunity costs.
• D) full product cost.

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Definitions:

C Corporation

A legal structure for a corporation in which the owners, or shareholders, are taxed separately from the entity, leading to potential double taxation on earnings.

Filing Statement

An official document submitted to a regulatory body or institution, detailing certain financial information or changes in ownership.

Tax-Free

Income, dividends, or distributions that are not subject to federal income tax.

Formed Corporation

A business entity that is legally created and registered under state law, offering liability protection to its owners.