GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Implicit Cost
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Specific cost
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Composite cost
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Simple Average Cost
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Detailed explanation-1: -Composite cost of capital is a company’s cost to finance its business, determined by, and also referred to as “weighted average cost of capital” or WACC. The calculation involves multiplying the cost of each capital component by its proportional weight and taking the sum of the results.
Detailed explanation-2: -Multiple costing, also known as composite costing, is a type of accounting method used when goods are sold that contain several other processed parts, and these parts are costed differently. Just as the final product needs a cost associated with it, so do each of the parts created by other processes.
Detailed explanation-3: -A composite of the cost of various sources of funds comprising a firm’s capital structure is its: Weighted-average cost of capital (WACC).