If a Decision Maker Uses Marginal Analysis, Then the Relevant

question 132

Multiple Choice

If a decision maker uses marginal analysis, then the relevant costs are the

• A) full costs of a particular activity or product.
• B) fixed costs which do not vary with the extra activity or output.
• C) profits obtained on the activity or product.
• D) average costs for a particular activity or product.
• E) additional costs of a particular activity or product.

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Definitions:

Rental Income

The income received from leasing out property or other assets.

Depreciation Expense

Depreciation Expense represents the allocation of the cost of tangible assets over their useful lives recognizing a decrease in value due to wear and tear, deterioration, or obsolescence.

Direct Financing Lease

A type of lease where the lessor effectively transfers all the risks and rewards incidental to ownership to the lessee without transferring legal ownership.