Marginal Cost Is Calculated as

question 185

Multiple Choice

Marginal cost is calculated as

• A) total cost divided by output.
• B) the increase in total cost divided by the increase in output.
• C) the increase in total cost divided by the increase in labor, given the amount of capital.
• D) total cost minus total fixed cost.

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Definitions:

Gross Profit

The difference between net sales and the cost of goods sold, indicating the profit made before deducting expenses like salaries and rent.

Payroll Tax Expense

The cost to employers that includes the total of the employer’s FICA OASDI, FICA Medicare, FUTA, and SUTA taxes.

Salaries Expense

An expense account recording the total amount paid to employees for services rendered during a specific period.

Freight-in

Costs associated with transporting inventory to the company, which are typically added to the cost of inventory.