Which of the Following Typically Would Be Considered an Incremental

question 161

Multiple Choice

Which of the following typically would be considered an incremental cost?

• A)Fixed cost
• B)Direct product cost
• C)Sunk cost
• D)Administrative overhead cost

---

Definitions:

Lockbox System

A service offered by banks to companies for the rapid collection of customer payments, by providing a special address to which payments are sent directly.

Opportunity Costs

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

Target Cash Balance

The optimal amount of cash a company sets as a goal to maintain for operational and contingency needs.

Lockboxes

Special post office boxes set up to intercept and speed up accounts receivable payments.