The Total of All Manufacturing Costs Plus the Total of All

question 94

Multiple Choice

The total of all manufacturing costs plus the total of all selling and administrative costs is equal to:

• A) target cost
• B) marginal cost
• C) full cost
• D) contribution cost

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Definitions:

Contribution Margin

The amount by which sales revenue exceeds variable costs, contributing to covering fixed costs and profit generation.

Fixed Costs

Expenses that do not change with the level of production or sales activities within a short time frame, such as rent, salaries, and insurance.

Variable Cost

Charges that adjust in accordance with the quantity of production or the scale of sales.

Incremental Profit

The additional profit derived from a specific business decision, comparing the profit levels before and after the decision.