Planet Design Services,Inc

question 198

Multiple Choice

Planet Design Services,Inc. ,is considering replacing a machine.The following data are available:

Which of the data provided in the table is a sunk cost?

• A)the annual cash operating costs of the old machine
• B)the annual cash operating costs of the replacement machine
• C)the disposal value of the old machine
• D)the original cost of the old machine

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Definitions:

Manufacturing Overhead

This includes all the indirect costs associated with manufacturing a product, such as utilities, indirect labor, and maintenance of equipment.

Manufacturing Overhead Applied

The process of assigning manufacturing overhead costs to the units produced, based on a predetermined overhead rate.

Work in Process Account

An inventory account that tracks the costs of products in various stages of completion but not yet finished.

Manufacturing Overhead

The indirect costs associated with manufacturing, exclusive of direct materials and direct labor expenses, necessary to produce goods.