A cost trade-off is a situation where:
A)all costs react according to their individual degrees of inflation in the economy
B)all costs are reflected as a percentage variation from standard costs
C)some costs increase and some costs decrease
D)some costs are eliminated by efficient management controls

Question

Quizplus · Accepted Answer

A cost trade-off refers to a situation where there are trade-offs between different costs. As such, some costs increase while others decrease. This can occur, for example, when a company decides to invest in more expensive but more efficient machinery to reduce labor costs over time. In this scenario, the cost of the new machinery may increase while the cost of labor decreases, resulting in a cost trade-off. Option A pertains to inflation, while option B relates to percentage variations. Option D discusses elimination of costs but not cost trade-offs.

A Cost Trade-Off Is a Situation Where