Question

C) write in the appropriate response

1) Ownership of W.T. Grant Company stock (the company is now out of business) is an example of a _________ cost.

2) Tooling and fixturing in a machine shop is an example of _________ cost.

3) The market value (i.e., current realizable value) of a piece of presently owned machinery is an example of what type of cost? ______________

4) Direct labor is an example of a _____________ cost.

5) Periodic replacements of palm trees along the North Carolina coast are an example of ______________ costs.

Answer 1

1) Ownership of a company which is out of business is the sunk costs because sunk costs are those costs which have been incurred in the past and currently not in use. Sunk costs cannot be retreived. Since in this company is out of business which means that it has been incurred at past but now it has not in use.

2) Tooling and fixturing is an example of fixed costs because fixed cost are those cost which remain fixed over a period of time and do not vary with the production. It has to be incurred whether the production is going on or not.

3) Market value calculation of the owned machinery is an examole of inputed or implicit cost because the implicit cost are those cost which is calculated by evaluating the current market value of an asset.

4) Direct labour is an example of direct cost because direct cost refers to all those cost which are directly related to the production of a commodity. Since Direct labour is directly linked so it will be a direct cost.

5) Periodic replacements of palm trees along the coastline is an example of period cost because period cost are those cost which are associated periodically and they are charged as an expense in tbe current accounting period.