Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I had a chance to rent my summer home for 2 weeks for $800. But I chose to have it idle. I didn't want strangers

"I had a chance to rent my summer home for 2 weeks for $800. But I chose to have it idle. I didn't want strangers living in my summer house." What term in this chapter describes the $800? Why?

A. Differential cost. It is the difference between two alternatives. It represents the potential cost of either renting the summer house or keeping the strangers out.

B. Outlay cost. The requirement of a future cash disbursement. This cost would be incurred in order to rent the summer house for a two-week period.

C. Incremental benefit. It is the additional revenues or reduced costs generated by a proposed alternative. The additional $800 is the benefit of renting the summer house.

D. Opportunity cost. It is the amount forgone by rejecting an opportunity. It signifies that the value to the owner of keeping those strangers out of the summer house for that two-week period is at least $800.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Value Added Auditing CERM Academy Series On Enterprise Risk Management

Authors: Greg Hutchins

4th Edition

978-0965466554

More Books

Students also viewed these Accounting questions

Question

How is the standard cost per unit for factory overhead determined?

Answered: 1 week ago

Question

1. What are the pros and cons of diversity for an organisation?

Answered: 1 week ago

Question

1. Explain the concept of diversity and equality in the workplace.

Answered: 1 week ago