What Is the Term for the Change in Total Cost

question 97

Multiple Choice

What is the term for the change in total cost resulting from a one-unit increase in production?

• A) average fixed cost
• B) average opportunity cost
• C) average variable cost
• D) marginal cost

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Definitions:

Contribution Margin Ratio

The contribution margin ratio is a financial metric that shows what percentage of sales revenue is not consumed by variable costs and thus contributes to covering fixed costs.

Fixed Costs

Costs that remain constant regardless of a company's level of activity, including expenses like lease payments, wages, and premiums.

Break-even Point

The point at which total costs and total revenue are equal, meaning no net loss or gain, and the business has "broken even."

Sales Dollars

A term used to represent the total value, in monetary terms, of all sales transactions within a specified period.