Bill is the manager of the product development division at Fiao Company. He has been invited to a company lunch with several colleagues. He is also expected to prepare a quarterly financial...

Bill is the manager of the product development division at Fiao Company. He has been invited to a company lunch with several colleagues. He is also expected to prepare a quarterly financial performance report on his division. The report is due in two days, and Bill estimates that there are approximately 16 to 20 hours of work remaining. A colleague remarks to Bill, while they discuss if Bill should attend the lunch, “You are not one to refuse a free lunch! You should go.” Bill responds by saying, “In this case, I am not sure there is such a thing as a free lunch.”

Required:

Explain the cost concept that best applies to Bill’s response.