-The Table Above Gives the Cost of Producing T-Shirts

question 122

Multiple Choice

-The table above gives the cost of producing T-shirts. The total fixed cost is ________ and the marginal cost of increasing production from 5 to 6 T shirts is ________.

• A) $20; $6
• B) $20; $10
• C) $10.40; $8
• D) unable to be determined; $8

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Definitions:

Joint Products

Products that are generated together in a production process and cannot be produced independently of each other.

Net Realizable Value

The estimated selling price of an item of inventory less any direct costs of disposal, such as sales commissions; the value of the receivables reduced to the amount that is expected to be collected or realized, computed as accounts receivable less allowance for doubtful accounts.

Cost Center

A department or function within a business that does not directly contribute to profit but incurs costs, used for performance evaluation and budgeting.

Physical Units Method

An approach to allocating joint costs based on the number of physical units produced at a certain stage in manufacturing.