Which of These Is an Opportunity Cost Associated with Dropping

question 105

Multiple Choice

Which of these is an opportunity cost associated with dropping a business segment?

• A) The revenue given up
• B) The avoidable fixed costs
• C) The benefits from using excess capacity for something else
• D) The increase in employee morale

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Definitions:

Total Product Cost

The full cost incurred to manufacture or acquire a product, including material, labor, and overhead expenses, up to the point of sale.

Materials Cost

The expense incurred for materials that are used in the production of goods or services.

Direct Labor Costs

Direct labor costs are the wages paid to employees who are directly involved in the production of goods or services.

Conversion Costs

Conversion costs are expenses incurred during the process of converting raw materials into finished products, including both direct labor and manufacturing overhead.