A Store Remains Open from 8 A

question 463

Multiple Choice

A store remains open from 8 a.m. to 4 p.m. each weekday. The store owner is deciding whether to stay open an extra hour each evening. The owner's marginal benefit

• A) is the benefit the owner receives from staying open from 8 a.m. to 5 p.m.
• B) depends on the revenues the owner makes during the day.
• C) must be greater than or equal to the owner's marginal cost if the owner decides to stay open.
• D) is the benefit the owner receives from staying open from 8 a.m. to 6 p.m.

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Definitions:

Overhead Rate

The rate at which indirect manufacturing costs are allocated to products or services.

Activity-Based Costing

A duplicate term; an accounting method that identifies and assigns costs to overhead activities and then links those costs to products, providing detailed information on where a company is incurring costs and why.

Manufacturing Overhead

All indirect costs associated with the production process, including but not limited to utilities, maintenance, and salaries of support staff.

Traditional Costing System

is an accounting method that applies indirect costs to products based on a predetermined rate, often not reflecting actual usage of resources.