In Estimating the Cost of a New Project, the Firm

question 203

Multiple Choice

In estimating the cost of a new project, the firm should exclude:

• A)opportunity costs.
• B)fixed costs.
• C)variable costs.
• D)alternative costs.
• E)b and c

---

Definitions:

Materials Cost

The total expense incurred from acquiring raw materials used in the manufacturing process.

Weighted-Average Cost Method

The weighted-average cost method is an inventory valuation approach that assigns a cost to inventory on the basis of the average cost of all similar items in the inventory.

Blending Department

A specialized section within a manufacturing facility where different materials or ingredients are mixed or combined to create a product.

Material Costs

Expenses associated with the materials required for the production of goods or services, usually categorized as direct materials that are part of the final product and indirect materials that support production.