In a Proposal to Increase the Production of Clock Radios

question 24

Multiple Choice

In a proposal to increase the production of clock radios, the sales managers of Rinaldo Electronics reported the total additional cost required to meet the increased production level. The increase in total cost is known as the

• A) opportunity cost.
• B) out-of-pocket cost.
• C) controllable cost.
• D) incremental cost.

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Definitions:

Fair Value Method

The Fair Value Method is an accounting strategy used to value certain assets and liabilities at their current market worth, not based on purchase costs or book value.

Unrealized Gains

Profits that have been achieved on paper from an investment but have not yet been realized through a transaction.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, culminating in the net income or loss for the period.

Fixed Assets

Long-term tangible assets used in operations, such as buildings and machinery, not expected to be converted to cash within a year.