When Using Quantity Discount Analysis, the Key Calculation Is the Incremental

question 35

True/False

When using quantity discount analysis, the key calculation is the incremental cost of each additional unit at different quantity levels.

---

Definitions:

Fixed Costs

Fixed costs are business expenses that do not change in proportion to the volume of goods or services produced or sold.

Make or Buy

A decision-making process regarding whether to produce goods in-house or purchase them from an external supplier.

Fixed Manufacturing Overhead

Indirect manufacturing costs that remain constant regardless of the level of production, such as factory rent and salaries of supervisory staff.

Direct Labor Cost

A rephrased definition: The cost incurred from the labor of workers who actively contribute to the manufacturing or creation of a product.