Cost in Decision-Making

Which type of costing incorporates both fixed and variable costs?

• Variable Costing

• Absorption Costing

• Standard Costing

• Marginal Costing

What is an example of direct cost?

• Administrative Expense

• Marketing & Advertising

• Direct Labour

• Maintenance & Repairs

Which of the following is a sunk cost?

• Lease Payments

• Salaries of permanent employees

• Utilities

• Research and development expenses for a failed project

What is the opportunity cost of using a warehouse to store goods instead of renting it out?

• The cost of maintaining the warehouse

• The forgone rental income

• The cost of goods sold

• The cost of utilities

Which of the following is a controllable cost?

• Marketing Expense

• Lease Payments

• Salaries of permanent employees

• Insurance

What is the primary focus of standard costing?

• Assigning actual costs to products

• Assigning estimated costs to control budgets

• Measuring variable costs only

• Calculating sunk costs

What was the fixed cost of Lockheed’s TriStar Project?

• $10 million per aircraft

• $16 million per aircraft

• $250 million in government bailout

• $1 billion in development

What was the selling price of each TriStar aircraft?

• $10 million

• $1 billion

• $16 million

• $250 million

What was the break-even point for Lockheed’s Tri Star project?

• 250

• 500

• 100

• 1,000

 Which external factor contributed to the failure of the Tri Star project?

• High demand for aircraft

• Low competition in the market

• Government subsidies

• 1970s oil shock