Module4Lecture5Notes - UGBA 10 Module 4 Lecture 5 Notes 4/5...

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UGBA 10 Module 4 Lecture 5 Notes 4/5 Accounting and Finance Review Questions What is true of Managerial Accounting? A. Reports are more frequent than financial accounting B. Reports will likely include some individual-specific figures such as sales per square foot C. Reports emphasize costs D. All of the above are true A firm has paid $35 for a bid package for the Central Tower contract on the Bay Bridge; if the contract is awarded, they will have to pay an additional $500,000 for worker’s compensation insurance. Which of the following is true? A. The $35 is a sunk cost B. The $35 and the $500,000 are sunk costs C. Only the $500,000 is a sunk cost D. Neither of the sums is a sunk cost What is contribution? A. Selling price fixed cost B. Fixed cost variable cost C. Selling price variable cost D. Fixed cost total selling price On a per unit basis More on Opportunity Cost Money we don’t make when we choose wrong investment Profit you missed out on because your money was tied elsewhere If chose Sears you lose 20% of your investment Cash los s, ―out of pocket loss‖ is $200 loss Cash loss + opportunity cost = Full cost (or total economic cost) 20% company remittances people send money home, goes towards tortilla and rice Mexican economy has a low from opportunity loss Second Example of Opportunity Cost Spring break, you decide to go to Cancun for $1,250 Out of pocket costs is $1,250 Alternative was to stay at home, work at Jamba Juice and make $400 Total Economic Cost Apple Sears Cash Loss, ―Out of Pocket Cost‖ Opportunity Cost 0%
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Opportunity cost is $400 Total Economic Cost = $1250 + $400 = $1650
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