Mell CoManufactured 100 Personal Computers at a Cost of $30,000

question 94

Multiple Choice

Mell Co.manufactured 100 personal computers at a cost of $30,000.It can sell them as is for $65,000,or install hard disks in them for $25,000 and sell them for $105,000.The $30,000 original manufacturing cost is:

• A)An out-of-pocket cost because it has already been paid.
• B)A sunk cost because it is not relevant to the decision.
• C)An incremental cost because it is relevant to the decision.
• D)A fixed cost because it will remain the same no matter which action is taken.

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Definitions:

Value or Worth

The importance, usefulness, or monetary valuation of something, often subject to change based on market demand or condition.

Statement About

A declaration or account made about a specific subject, detailing facts or opinions.

Implied Warranty

A legal term for the assumption that a sold product will fulfill its intended purpose.

Fitness for a Particular Purpose

A legal concept that implies a product is suitable for the specific use the buyer intends.