If You Eat at a Las Vegas Casino That Charges

question 169

Multiple Choice

If you eat at a Las Vegas casino that charges $12 for its all you can eat buffet, then the marginal cost of your third trip to the buffet line is

• A) zero.
• B) $4.
• C) $12.
• D) $36.

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Definitions:

Variable Cost

Costs that vary directly with the level of production output or activity, such as materials and labor directly involved in manufacturing.

Fixed Cost

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance, over a specified period.

High-Low Method

A technique in managerial accounting used to estimate fixed and variable costs by analyzing the highest and lowest levels of activity and the associated costs.

Variable Cost

Expenses that change in proportion to the activity of a business such as raw materials and direct labor costs.