Distinguish between escapable and inescapable costs. Give an example
Escapable costs are directly related to the system, and they cease to exist when the system ceases to exist. An example would be an annual software support fee for purchased software. If the system ceases to exist, the support for the software will no longer be necessary. Inescapable costs, on the other hand, represent costs which will not be eliminated if the system is scrapped. An example would be an overhead charge for office space in a building which is owned by the company. If the system ceases to exist, these costs will be allocated to the remaining departments.
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An investor earns dividends of $450 during the course of a year. At the end of the year, the stock is worth $10,700. If the capital-gains yield on the stock over the year is calculated at 8 percent the approximate worth of the stock at the beginning of the year was
A. $9,007. B. $9,457. C. $9,907. D. $10,357.
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What will be an ideal response?
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