In a proposal to increase the production of clock radios,the sales managers of Rinaldo Electronics reported the total additional cost required to meet the increased production level.The increase in total cost is known as the
A)opportunity cost.
B)sunk cost.
C)uncontrollable cost.
D)differential cost.

Question

Quizplus · Accepted Answer

The increase in total cost required to meet the increased production level is a differential cost, which is the difference in cost between two alternatives. In this case, it is the cost difference between the current level of production and the proposed increased level of production. Option A, opportunity cost, refers to the cost of the next best alternative foregone. Option B, sunk cost, refers to a cost that has already been incurred and cannot be recovered. Option C, uncontrollable cost, refers to a cost that cannot be influenced or changed by management decisions.

In a Proposal to Increase the Production of Clock Radios,the