According to the Marginal Decision Rule, If Marginal Benefit

question 115

Multiple Choice

According to the marginal decision rule, if marginal benefit:

• A) exceeds marginal cost, an activity should be increased.
• B) is less than marginal cost, an activity should be increased.
• C) is equal to marginal cost, an activity should be increased.
• D) exceeds marginal cost, net benefit is maximized.

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Definitions:

Operating Cycle

The total time it takes for a company to purchase inventory, sell the products, and collect the cash from the sales.

Cash Cycle

The period it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

Inventory

The total amount of goods and materials held by a company intended for sale or production.

Total Inventory Cost

Total inventory cost includes all costs associated with holding and managing inventory, such as purchasing, storing, and handling costs.