A Manufacturing Plant Produces Two Product Lines: Golf Equipment and Soccer

question 187

Multiple Choice

A manufacturing plant produces two product lines: golf equipment and soccer equipment. An example of direct costs for the golf equipment line are:

• A)beverages provided daily in the plant break room
• B)monthly lease payments for a specialized piece of equipment needed to manufacture the golf driver
• C)salaries of the clerical staff that work in the company administrative offices
• D)utilities paid for the manufacturing plant

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Definitions:

Sunk Costs

Outlays already made that cannot be refunded or retrieved.

Project Value

The total worth of a project, calculated by evaluating all incoming and outgoing cash flows to determine its overall financial benefit.

Cost Reduction

Refers to strategies and actions a company undertakes to decrease its total expenses and improve profitability.