Jones Company Developed the Following Static Budget at the Beginning

question 111

Multiple Choice

Jones Company developed the following static budget at the beginning of the company's accounting period: $\begin{array}{lr}\text { Revenue ( } 8,100 \text { units) } & \$ 16,200 \\\text { Variable costs } & \underline{ 4,050} \\\text { Contribution margin } & \$ 12,150 \\\text { Fixed costs } & \underline{4,050 }\\\text { Net income } & \underline{\$ 8,100}\end{array}$
If actual production totals 8,500 units, the flexible budget would show total costs of:

• A) $4,250.
• B) $8,300.
• C) $4,150.
• D) None of these is correct.

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Definitions:

Diminishing Marginal Utility

The principle stating that as a person consumes more of a good or service, the satisfaction gained from each additional unit decreases.

Utility Maximizer

An economic concept referring to consumers who select goods or services in a way that maximizes their total satisfaction or utility.

Utility From Milk

The satisfaction or benefit a consumer receives from consuming milk, assessing its nutritional value and taste preferences.

Optimal Consumption Rule

A guideline suggesting that to maximize utility, consumers should allocate their budget in a way that the last dollar spent on each good or service yields the same level of marginal utility.