Thornton Industries has 2,700 defective units of product that already cost $28 each to produce. A salvage company will purchase the defective units as is for $12 each. Thornton's production manager reports that the defects can be corrected for $20 per unit, enabling them to be sold at their regular market price of $28. The $28 per unit is a: Multiple Choice Sunk cost. Opportunity cost. Out-of-pocket cost. Period cost. Incremental cot.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Thornton Industries has 2,700 defective units of product that already cost $28 each to produce. A salvage company will purchase the defective units as
is for $12 each. Thornton's production manager reports that the defects can be corrected for $20 per unit, enabling them to be sold at their regular
market price of $28. The $28 per unit is a:
Multiple Choice
Sunk cost.
Opportunity cost.
Out-of-pocket cost.
Period cost.
Incremental cost.
Transcribed Image Text:Thornton Industries has 2,700 defective units of product that already cost $28 each to produce. A salvage company will purchase the defective units as is for $12 each. Thornton's production manager reports that the defects can be corrected for $20 per unit, enabling them to be sold at their regular market price of $28. The $28 per unit is a: Multiple Choice Sunk cost. Opportunity cost. Out-of-pocket cost. Period cost. Incremental cost.
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