The Cost of Producing One More Unit of a Good

question 312

Multiple Choice

The cost of producing one more unit of a good or service that is paid by the producer

• A) has to be equal to the benefit that the consumer derives from that good.
• B) is equal to the cost borne by people other than the producer.
• C) is the marginal private cost.
• D) is the marginal external cost.

Grasp the significance of strategic, tactical, and operational planning in achieving organizational objectives.

Understand the role and importance of forecasting in planning and the management function.

Learn about the critical skills required for effective management and leadership.

Differentiate between efficiency and effectiveness in management practices.

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Definitions:

Standard Cost Formula

A calculated estimate of the expected cost of production, including direct labor, materials, and overhead, used for budgeting and variance analysis.

Level Of Activity

Refers to the volume of work performed or capacity utilized within a specific period.

Fixed Manufacturing Overhead

The costs that do not change with the level of production, including costs such as rent, insurance, and salaries for management.

Direct Materials

Direct materials are raw materials that are directly traceable to the manufacturing of a specific product and constitute a significant portion of its production cost.