XYZ, Inc Is Considering Adding a Product Line That Would Utilize

question 18

Multiple Choice

XYZ, Inc. is considering adding a product line that would utilize floor space in their manufacturing plant which is currently used for storage. XYZ will need to rent new storage space elsewhere. The floor space would be considered a(n)

• A) variable cost.
• B) opportunity cost.
• C) sunk cost.
• D) irrelevant cash flow.

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Definitions:

FICA-OASDI

Federal Insurance Contributions Act - Old-Age, Survivors, and Disability Insurance; a payroll tax that funds Social Security and Medicare in the United States.

Workers' Compensation

Insurance offering medical benefits and wage replacement to employees who become injured while on the job.

Clerical Support

Administrative assistance typically involving office or paper work.

Management

The process of directing and controlling a group of people or an organization to achieve a goal.