Most Film Processing Companies Have a Policy of Printing Every

question 14

Multiple Choice

Most film processing companies have a policy of printing every picture on a roll of film and allowing customers to request a refund for pictures that were not clearly developed. The companies do this knowing that most customers do not ask for refunds. This is an example of consumers

• A) failing to ignore sunk costs.
• B) being overly optimistic about their future behavior.
• C) not taking nonmonetary opportunity costs into account.
• D) not making themselves aware of the policy regarding refunds.

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Definitions:

Maintenance Cost

Maintenance Cost involves expenses incurred to keep assets, equipment, or property in optimal condition and operating efficiently, including repairs and preventive care.

Administrative Costs

Overhead expenses associated with the day-to-day running of a business, involving clerical activities, and support services not linked directly to production.

Service Department Expenses

Costs incurred by the departments that support the primary activities of a business but do not directly engage in production.

Operating Departments

Operating departments refer to the divisions within a company directly involved in its core business activities and operations.