If Fixed Costs Do Not Change, Then Marginal Cost

question 204

Multiple Choice

If fixed costs do not change, then marginal cost

• A)also remains constant.
• B)equals the change in variable cost divided by the change in output.
• C)equals the change in average variable cost divided by the change in output.
• D)equals the change in average fixed cost divided by the change in output.

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Definitions:

Variable Costs

Expenses that fluctuate directly with the volume of production or sales, such as raw materials and direct labor costs.

Fixed Costs

Constant expenditures that do not change with the volume of production or sales, such as rent or salaries.

Contribution Margin Ratio

A measure expressing how a product's selling price exceeds variable costs, shown as a percentage of the sales price.

Fixed Expenses

Costs that do not vary with the volume of production or sales, such as rent, salaries, and insurance.