Mark is an engineer who has designed a telecommunications device. He is convinced that there is a big potential market for the device. Accordingly, he has decided to quit his present job and start a company to manufacture and market the device.
-The cost of the raw materials that will be used in manufacturing the computer board is:
A) a sunk cost
B) a fixed cost
C) a period cost
D) a variable cost

Question

Quizplus · Accepted Answer

The cost of raw materials is a variable cost because it varies with the level of production. As more units of the device are manufactured, the cost of raw materials will increase proportionally. Sunk costs are past costs that cannot be recovered, fixed costs remain the same regardless of the level of production, and period costs are associated with a specific period of time such as rent or marketing expenses.

Mark Is an Engineer Who Has Designed a Telecommunications Device