The Costs Incurred Beyond the Split-Off Point Are Called

question 34

Multiple Choice

The costs incurred beyond the split-off point are called

• A) split-off point costs.
• B) incremental costs.
• C) joint product costs.
• D) by-product costs.

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Definitions:

Economic Costs

The sum of explicit and implicit costs which represent the total opportunity costs of resource utilization in the production of goods or services.

Opportunity Costs

The loss of potential gain from other alternatives when one alternative is chosen.

Explicit Costs

Direct, out-of-pocket payments for expenses incurred in conducting business, such as wages, rent, and materials.

Implicit Costs

The opportunity costs that are not directly paid for or incurred in transactions but represent real costs to a business.