All of the Costs Associated with Making and Enforcing Contracts

question 152

Multiple Choice

All of the costs associated with making and enforcing contracts are referred to as

• A) alternative costs.
• B) opportunity costs.
• C) marginal costs.
• D) transactions costs.

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Definitions:

Direct Labor Hours

The total hours worked directly on a product or service by employees in the production process.

Overhead Rate

A measure used to allocate overhead costs to produced goods, calculated by dividing total overheads by an allocation base, such as labor hours.

Departmental Overhead Rates

Specific rates used to allocate overhead costs to different departments within a company based on varying criteria.

Machine Hours

represent a measure of the amount of time a machine is in operation, used in costing to allocate expenses based on the use of machinery.