If Ben's MPC Is

question 102

Multiple Choice

If Ben's MPC is .80, this means that he will:

• A)spend eight-tenths of any increase in his disposable income.
• B)spend eight-tenths of any level of disposable income.
• C)break even when his disposable income is $8,000.
• D)save eight-tenths of any level of disposable income.

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Definitions:

Direct Method

A method of reporting the cash flows from operating activities as the difference between the operating cash receipts and the operating cash payments.

ABC

Activity-Based Costing, a method that allocates overhead and indirect costs to related products and services based on their usage.

Support Department Costs

Expenses related to departments that do not directly contribute to the production of goods or services but provide necessary support, such as IT and HR.

Support Activity Costs

Expenses related to functions that assist the core operations of a business, such as human resources or accounting, which do not directly contribute to the production of goods or services.