14. What is the opportunity cost of making a component part in a factory with no excess capacity? Select one: a. Variable manufacturing cost of the component. b. Cost of the production given up in order to manufacture the component. c. Net benefit foregone from the alternative use of the capacity required. d. Fixed manufacturing cost of the component.

14. What is the opportunity cost of making a component part in a factory with no excess capacity? Select one: a. Variable manufacturing cost of the component. b. Cost of the production given up in order to manufacture the component. c. Net benefit foregone from the alternative use of the capacity required. d. Fixed manufacturing cost of the component.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 15MC: When operating in a constrained environment, which products should be produced? A. products with the...

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When deciding whether to make or buy a component part, the most relevant consideration is often: Question options: a) The sunk cost of equipment used to manufacture the part. b) The unavoidable fixed manufacturing costs. c) The average total cost of making the part. d) The variable manufacturing costs per unit.
“A component part should be purchased whenever the purchase price is less than its total manufacturing cost per unit.” Do you agree? Why?
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Which of the following statements is FALSE? a. There is a cause-and-effect relationship between the cost driver and the amount of cost. b. Over the long run all costs have cost drivers. c. Volume of production is a cost driver of direct manufacturing costs. d. Fixed costs have cost drivers over the short run.
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What would be the effect on the unit cost of finished goods if an estimate of the stage of completion of work in process was: too high? too low?
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