Use the Following Information for Questions
Papillon Co -The Cost Base Using the Variable-Cost Approach Is
A) $90

question 46

Multiple Choice

Use the following information for questions
Papillon Co. has determined the following per unit amounts: $\begin{array}{lrlr}\text { Direct materials } & \$ 30 & \text { Fixed selling and administrative } & \$ 60 \\\text { Direct labor } & 36 & \text { Variable overhead } & 24 \\\text { Desired ROI } & 33 & \text { Variable selling and administrative } & 15 \\\text { Fixed overhead } & 45 & &\end{array}$
-The cost base using the variable-cost approach is

• A) $90.
• B) $105.
• C) $195.
• D) $135.

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Definitions:

Allocative Efficiency

A state of resource allocation where it is not possible to make any one individual better off without making at least one individual worse off.

Average Variable Cost

The total variable cost divided by the quantity of output produced; it represents the variable cost per unit of output.

Marginal Cost

Marginal cost is the cost of producing one additional unit of a good or service.

Consumer Demand

The desire of purchasers, consumers, clients, or users to buy goods and services measured over time.