The Following Data Are for a Series of Increasingly Extensive

question 68

Multiple Choice

The following data are for a series of increasingly extensive ?ood-control projects. $$\begin{array} { | l | c | c | } \hline & \text { Total Cost per Year } & \text { Total Benefit per Year } \\\hline \text { Plan } A = \text { Levees } & \$ 10,000 & \$ 16,000 \\\hline \text { Plan } B = \text { Small Reservoir } & 24,000 & 36,000 \\\hline \text { Plan C = Medium Reservoir } & 44,000 & 52,000 \\\hline \text { Plan } D = \text { Large Reservoir } & 72,000 & 64,000 \\\hline\end{array}$$ For Plan D marginal costs and marginal bene?ts are

• A) $72,000 and $64,000, respectively.
• B) $28,000 and $12,000, respectively.
• C) $24,000 and $18,000, respectively.
• D) $16,000 and $28,000, respectively.

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Definitions:

Activity-Based Costing

A costing methodology that assigns costs to products and services based on the resources they consume.

Overhead Costs

Indirect costs of running a business that are not directly tied to a specific product or service, such as rent, utilities, and insurance.

Product Costing

The method used to assign costs to a product, including direct materials, direct labor, and overhead expenses.

Cost Driver

An activity or factor that incurs costs based on its level of use or consumption, influencing the total cost of production.