If the required rate of return is 12% and the per unit cost of units purchased is $35, then the relevant opportunity cost of capital will be ____________?
Correct answer: C. $4.20
- A. $6.20
- B. $7.20
- C. $4.20
- D. $5.20
Explanation
Opportunity cost of capital per unit is calculated as the required return multiplied by the unit cost: 12% × $35 = $4.20. This represents the return forgone by investing in that inventory.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
Practise Cost Accounting
941 free Cost Accounting MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Accounting questions like this
Accounting is on 2 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Cost Accounting questions
Buying of goods or materials for production in a way that they are delivered directly on the manufacturing facility of company is called ____________?
The costs of issuing purchase orders, making of delivery records for tracking payments and costs of inspection of items are classified as _____________?
If the purchase order lead time is 35 minutes and number of units sold per time is 400 units, then reorder point will be ____________?
The decision model to calculate optimal quantity of inventory to be ordered is called ____________?
A push through system, according to which goods are manufactured for finished inventory solely, on the basis of forecasted demand can be classified as ___________?
An example of shrinkage costs is _____________?