The Three Most Common Cost Behavior Classifications Are

question 197

Multiple Choice

The three most common cost behavior classifications are

• A) variable costs, product costs, and sunk costs
• B) fixed costs, variable costs, and mixed costs
• C) variable costs, period costs, and differential costs
• D) variable costs, sunk costs, and opportunity costs

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Definitions:

Direct Labour

Labor costs associated with employees who are directly involved in the production of goods or services.

Manufacturing Overhead

Indirect factory-related costs that cannot be directly traced to a specific product, including salaries of supervisors, rent, and utilities of the factory.

Opportunity Cost

Opportunity cost represents the value of the best alternative that is foregone when a particular decision is made, indicating the cost of missed opportunities.

Alternatives

Different choices or options available to a decision-maker in a decision-making process.