Final answer:
The term for departments that incur expenses but do not generate revenue is 'cost centers'. These include accounting, HR, and legal departments, and are considered explicit costs, while opportunity costs represent implicit costs.
Step-by-step explanation:
The term used for areas of the organization that incur expenses without directly bringing in revenue, such as accounting, human resources (HR), legal, and other support departments, is called cost centers. While these departments do not generate revenue, they are essential for the effective functioning of a company.
The expenses they incur are examples of explicit costs, which are out-of-pocket costs for activities such as paying employee wages or office rent. Implicit costs, on the other hand, represent the opportunity cost of utilizing resources the company already owns, such as using space in a home for business purposes or the owner’s time when they do not take a formal salary. Both types of costs are crucial for a comprehensive understanding of a company's financial picture.
Opportunity costs, as shown in the example of employees attending a two-day retreat, also play a significant role. These costs reflect the potential benefits that are forgone by choosing one option over another, like employees not performing their usual work while attending the retreat.