Utility Measures

question 144

Multiple Choice

Utility measures

• A) the amount of satisfaction gained from the consumption of a good or service.
• B) the market value of a product.
• C) how easy it is to substitute one good for another.
• D) the resource value of a good or service.

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Definitions:

High-Low Method

A technique used in cost accounting to estimate variable and fixed costs based on the highest and lowest levels of activity.

Break-Even Point

The point at which total costs equal total revenues, indicating that a business is neither making a profit nor incurring a loss.

Contribution Margin Ratio

The contribution margin ratio is a financial metric indicating the proportion of sales revenue that exceeds variable costs and is available to cover fixed costs and generate profit.

Fixed Costs

Outlays for rent, salaries, and insurance that are unaffected by variations in the volume of production or sales.