Accounting: What the Numbers Mean 11th Edition by Wayne McManus,Daniel Viele,David Marshall

Exercise 33

Application of cost terminology Assume that you have decided to drive your car to Florida for the spring break. A classmate learns about your plans and asks about riding along with you. Explain how you would apply each of the following cost concepts to the task of determining how much, if any, cost you would take into consideration for the purposes of setting a price to be charged for taking the classmate with you.
a. Differential cost.
b. Allocated cost.
c. Sunk cost.
d. Opportunity cost.