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Match the Following Definitions with the Appropriate Terms

Question 139

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Match the following definitions with the appropriate terms

Premises:
A cost that requires a current outlay of cash.
The incremental revenue generated by selecting a particular course of action over another.
An avoidable cost.
A cost that cannot be avoided or changed in any way because it arises from a past decision; irrelevant to current and future decisions.
An additional cost incurred only if a particular action is taken.
The potential benefits of one alternative that are lost by choosing an alternative course of action.
Responses:
Incremental cost
Opportunity cost
Out-of-pocket cost
Relevant cost
Sunk cost
Relevant benefits

Correct Answer:

A cost that requires a current outlay of cash.
The incremental revenue generated by selecting a particular course of action over another.
An avoidable cost.
A cost that cannot be avoided or changed in any way because it arises from a past decision; irrelevant to current and future decisions.
An additional cost incurred only if a particular action is taken.
The potential benefits of one alternative that are lost by choosing an alternative course of action.
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