Laco Company acquired its factory building about 20 years ago. For a number of years the company has rented out a small, unused part of the building. The renters lease will expire soon. Rather than renewing the lease, Laco is considering using the space itself to manufacture a new product. Under this option, the unused space will continue to be depreciated on a straight-line basis, as in past years. In response to the renters request, Laco made improvements to the building 2 years ago that cost the company $20,000. The current renter pays $5,000 per month to rent the unused part of the building. The renter is expected to renew the lease for the following year if Laco decides against using the space itself. Direct materials and direct labor cost for the new product would be $50 per unit. In order to have a place to store finished units of the new product, the company would have to rent a small warehouse nearby. The rental cost would be $3,500 per month. It would cost the company an additional $4,000 each month to advertise the new product. A new production supervisor would be hired to oversee production of the new product and would be paid $4,500 per month. The company would pay a sales commission of $7 for each unit of product that is sold. Required: For each of the categories of costs listed below (a. h.), provide a brief definition of each type of cost and identify which category each of Lacos costs listed above represent. Note that individual costs for the company may represent multiple cost categories.

a) Opportunity cost

b) Sunk cost

c) Variable cost

d) Fixed cost

e) Manufacturing overhead cost

f) Product cost

g) Selling cost

h) Differential cost