If Activity-Based Costing Is Used, Modifications Made by Engineering to the Product

question 27

Multiple Choice

If activity-based costing is used, modifications made by engineering to the product design of several products would be classified as a

• A)unit-level activity.
• B)batch-level activity.
• C)product-level activity.
• D)facility-level activity.

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Definitions:

Marginal Revenue

The increase in profit from selling an extra unit of a good or service.

Average Nightly Room Rate

A measure used in the hospitality industry to calculate the average price paid per room per night.

Monopolistic Competition

A marketplace setup where plenty of businesses distribute products that resemble each other but are not duplicates, allowing them a partial degree of marketplace power and the ability to individualize their offerings.

Pure Competition

A market structure characterized by a large number of small firms, homogenous products, and easy market entry and exit, leading to price takers rather than price makers.