Question

1- Determine what type of costs for each statement.

Variable Cost , Sunk Cost , Direct Cost , Life Cycle Cost , Opportunity Cost , Indirect Cost , Fixed Cost

a- The costs associated with running the business, e.g. management salaries, rent, insurance?

b- A previously incurred cost that has no bearing on future decisions is also known as a?

c- The benefit you forego by selecting one alternative over another.

d- Costs that change with the amount of units produced, e.g. the cost of aluminum per unit.

e- Costs associated directly with production output, e.g. the cost of labor, cost of material.

2- In a break-even analysis, the goal is to identify the number of units where the Total Revenue from sales is equal to the:

a- All Sunk Costs spent up to the current time

b- Variable Costs

c- Total Fixed plus Variable Costs

d- Fixed Costs

Answer 1

1) a- The costs associated with running the business, e.g. management salaries, rent, insurance? :  Fixed Cost .

b- A previously incurred cost that has no bearing on future decisions is also known as a? : Sunk Cost

c- The benefit you forego by selecting one alternative over another. : Opportunity Cost .

d- Costs that change with the amount of units produced, e.g. the cost of aluminum per unit. : Variable Cost .

e- Costs associated directly with production output, e.g. the cost of labor, cost of material. : Direct Cost .

2) c- Total Fixed plus Variable Costs

( Break even : Total Revenue = Total Cost )