Laura Is a Manager for HP

question 287

Multiple Choice

Laura is a manager for HP. When Laura must decide whether to produce a few additional printers, she is choosing at the margin when she compares

• A) the total revenue from sales of printers to the total cost of producing all the printers.
• B) the extra revenue from selling a few additional printers to the extra costs of producing the printers.
• C) the extra revenue from selling a few additional printers to the average cost of producing the additional printers.
• D) HP's printers to printers from competing companies, such as Lexmark.

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Definitions:

Direct Materials

Raw materials that are directly traceable to the production of specific goods or services.

Contribution Margin

The amount by which sales revenue exceeds variable costs, contributing to covering fixed costs and generating profit.

Variable Production Costs

Costs that vary directly with the level of production output, such as raw materials and direct labor.

Useful Life

The estimated period over which an asset is expected to be usable by the owner, affecting its depreciation calculation.