At the 50th Unit of Action, the Marginal Benefit Is

question 71

Multiple Choice

At the 50th unit of action, the marginal benefit is equal to $20 and the marginal cost is equal to $25. Which of the following is true?

• A)The 50th unit of action should not be undertaken.
• B)The 50th unit of action should be undertaken.
• C)The 50th unit of action minimizes total costs.
• D)The 50th unit of action maximizes total gains (total profits).

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Definitions:

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to products, calculated before the period begins based on estimated costs and activity levels.

Machine-Hours

The total hours that a machine is operational, used as a measure for allocating manufacturing overhead costs.

Plantwide Predetermined

A method that assigns overhead costs to products based on a single predetermined overhead rate for the entire factory or plant.

Manufacturing Overhead

Refers to all the indirect costs associated with the production process, excluding direct materials and direct labor costs.