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Which of the following statements is true regarding opportunity cost?
Opportunity cost is the potential benefit lost by selecting a particular course of action. If idle space has no alternative use, there is no benefit foregone, opportunity cost is zero.
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Costs relevant to a make or buy decision include variable labor and variable materials as well as:
Avoidable fixed costs attach to a specific decision and are incurred only if that decision is taken. They are relevant in marginal analysis.
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An important concept in decision making is described as "the contribution to income that is foregone by not using a limited resource to its best alternative use." This concept is called:
Opportunity cost is the contribution to income that is foregone by not using a limited resource for its best alternative use.
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Pro forma financial statements are part of the budgeting process. Normally, the last pro forma statement prepared is:
The statement of cash flows is the last pro forma statement prepared.
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The cash receipts budget includes:
The cash receipts budget includes loan proceeds.
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Which of the following factors would assist in a make or buy analysis?
In assessing how much a decision will cost, as well as how much cash that decision will bring in, a firm can accurately deduce which option is in their best interest.
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