When Labour Is the Only Input a Firm Uses, the Marginal

question 57

Multiple Choice

When labour is the only input a firm uses, the marginal cost of a unit of output can be defined as:

• A)wage / (marginal product of labour)
• B)(marginal product of labour) / wage
• C)marginal revenue - wage
• D)marginal product of labour - wage

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Definitions:

Activity-Based Costing

An accounting method that identifies the activities a firm performs and assigns costs to products and services based on the actual consumption of resources.

Total Overhead Cost

The sum of all indirect costs of manufacturing or providing services that are not directly tied to a specific product or job.

Activity Rate

This refers to the cost driver rate used in activity-based costing to allocate costs to products or services based on the activities that those products or services require.

Activity Cost Pool

A grouping of all the costs related to a particular activity, used in activity-based costing to allocate costs to products or services.