Question

classify the followings as differntial cost,Opportunity cost,Sunk cost, or marginal

1-A company decides to paint their building using plant labor (2 people). It will take the two person crew 10 days to do the work. The plant labor costs $40/hour total. The company can hire painting contractor to paint the building in 5 days for $2500. The cost of the company’s crew to paint the building is an example of:

2-When a company uses its cost data to determine the optimum production quantity for it’s operations, this is known as:

3-A company major expense each month are rent, salaries and loan payments. Each of these expense are considered:

4-A company is evaluating a supplier bid for outsourcing soldering of printed circuit boards. The company’s cost is $16.70 per board while the outsourcing option is $1.95 more per unit.

Answer 1

1-A company decides to paint their building using plant labor (2 people). It will take the two person crew 10 days to do the work. The plant labor costs $40/hour total. The company can hire painting contractor to paint the building in 5 days for $2500. The cost of the company’s crew to paint the building is an example of: Differential cost.

2-When a company uses its cost data to determine the optimum production quantity for it’s operations, this is known as: Marginal Cost

3-A company major expense each month are rent, salaries and loan payments. Each of these expense are considered: Sunk Cost.

4-A company is evaluating a supplier bid for outsourcing soldering of printed circuit boards. The company’s cost is $16.70 per board while the outsourcing option is $1.95 more per unit: Opportunuity Cost