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Yesterday, 20:52

Select either true or false for the following statements. 1. Relevant costs are also known as unavoidable costs 2. Incremental costs are also known as differential costs 3. An out-of-pocket cost requires a current and/or future outlay of cash. 4. An opportunity cost is the potential benefit that is lost by taking a specific action when two or more alternative choices are available 5. A sunk cost will change with a future course of action.

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  1. Yesterday, 21:21
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    1. Relevant costs are also known as unavoidable costs - False.

    Relevant costs are in fact, avoidable cost that only emerge in specific business decisions.

    2. Incremental costs are also known as differential costs - False

    Incremental costs are costs that are incurred when an additional unit of output is produced. Differential costs ocurr when a particular product is made instead of another.

    3. An out-of-pocket cost requires a current and/or future outlay of cash. - True

    An out-of-pocket cost or expense is a direct payment of money, in other words, an outlay of cash.

    4. An opportunity cost is the potential benefit that is lost by taking a specific action when two or more alternative choices are available - True

    An opportunity cost can also be defined as what is given up to obtain something.

    5. A sunk cost will change with a future course of action. - False

    Sunk costs are costs incurred in the past, that cannot be recovered, or modified.
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