Solution:
True.
Under opportunity cost approach, the cost of each alternative includes the incremental costs and the opportunity cost as they relevant to the decision.
Under the opportunity cost approach, the cost of each alternative includes the incremental costs and the...
If revenues are $315,000 under alternative A and $324,000 under alternative B, and costs are $285,000 for A and $306,000 for B, then using the basic approach in incremental analysis, incremental revenues, costs, and net income in comparing B to A are respectively Select one: a. $9,000, $(21,000), $(12,000). b. $9,000, $21,000, $12,000. c. $(9,000), $21,000, $12,000. d.$(9,000), $(21,000), $(12,000). The cost to manufacture an unfinished unit is $120 ($90 variable, $30 fixed). The selling price per unit is $150....
A firm's economic profit includes all opportunity costs incurred by the firm. True False
Costs and Opportunity Costs • You are deciding whether to attend LU, and you figure the cost to be.. Tuition: $5,000 Books and school supplies: 1,000 Room and board: 10,000 Transportation: 4,000 Miscellaneous expenses: 3,000 • Total money cost: $23,000 This gives you the cost of one year at LU, but in order to decide if you should go. Let's look at the Opportunity Cost Opportunity Cost • Tuition: Books and school supplies: Foregone wages from working: $ 5,000 1,000...
In addition to the above (sunk costs, opportunity costs, incremental costs) many times there are qualitative factors that come into the decision making process. What nonquantitative aspects may also be relevant to the decision?
Costs incurred before the split-off point are a. incremental costs. b. relevant costs. c. opportunity costs. d. sunk costs.
1- The break-even point is the point where: A. incremental revenue equals incremental costs. B. marginal revenue equals marginal cost. C. the slope of the demand curve equals the slope of the cost curve. D. total revenue equals total cost. 2- When the threat of new entrants is low, prices tend to be: A. higher. B. stable. C. lower. D. variable. 3- Costs that do not change with the volume produced are referred to as: A. unavoidable costs. B. totally...
Question 1 (1 point) Saved The rate of return calculated from an incremental analysis represents the rate of return obtainable on the extra investment of the higher initial cost alternative. e True False Question 2 (1 point) When the mutually exclusive alternatives under consideration have only disbursements (service alternatives), the do nothing alternative must be included so that a rate of return analysis can be conducted on the incremental cash flow True False Question 3 (1 point) When more than...
What is the difference between the cash flow approach and the opportunity cost approach for replacement decisions? The opportunity cost approach factors in the trade-in allowance, whereas the cash flow approach does not. These are actually two names for the exact same approach. Thus, there is absolutely no difference between them. Only the cash flow approach factors in taxes, so it is the only one we should ever use. The opportunity cost approach treats the sale proceeds from selling the...
Opportunity cost defines the cost of an activity as the foregone benefit from the next best alternative activity. True OR False
Why is it worthwhile to isolate relevant costs under the differential cost approach when the total cost approach results the same outcome?