(e) Present economy studies are often done when the time value of money is not a
ID: 342766 • Letter: #
Question
(e) Present economy studies are often done when the time value of money is not a significant factor in the situation. Overhead costs normally include all costs that are not direct costs. (g) Optimal volume (demand) occurs when total costs equal total revenues. (h) There is no D* for this Scenario 1 situation: o) Most decisions are based on differences that are perceived to exist between alternatives. A nonrefundable cash outlay (e.g., money spent on a passport) is an example of an opportunity cost.Explanation / Answer
(e) True
PResent economy studies are the economic analyses to compare the alternatives over one year or less, when time value of money is not a significant factor.
(f) False
Indirect costs includes all costs that are not part of direct costs (directly attributable to production). Overhead costs can be both direct and indirect. Overhead costs includes expenses such administration, facilities, security costs.
(g) False
Optimal volume (D*) occurs when profit is maximized. Total costs and total revenues are equal to Breakeven point
(h) Scenario situation is not provided in the question
(i) True
Most decisions are based on perceived differences between alternatives, even if real differences do not exist.
(j) False
This is an example of sunk cost.
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