Micro Computer Company Has Set Up a Toll-Free Telephone Line

question 57

Multiple Choice

Micro Computer Company has set up a toll-free telephone line for customer inquiries regarding computer hardware produced by the company. The cost of this toll-free line would be classified as which of the following?

• A) Product cost
• B) Manufacturing overhead
• C) Direct labor
• D) Period cost

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Definitions:

Loss Aversion

A principle in behavioral economics stating that individuals tend to prefer avoiding losses to acquiring equivalent gains.

Price Increase

A rise in the cost of goods or services over time, often measured as a percentage.

Quality Reduction

A decrease in the standard or grade of products or services, often as a cost-saving measure by producers.

Prospect Theory

A behavioral economic theory that describes how people choose between probabilistic alternatives that involve risk, where the probability of outcomes is known.