During 2012, Bernard Inc

question 108

Multiple Choice

During 2012, Bernard Inc. constructed a new factory. Bernard used its current employees to build the factory. Building material costs for the new factory were $2,700,000; total labor costs were $1,400,000; total company overhead was $7,500,000 (20% of which could be assigned to the new project) ; and interest paid on a new construction loan for the project was $750,000. What was the total cost of the self-constructed factory?

• A) $6,350,000
• B) $4,850,000
• C) $5,600,000
• D) $12,350,000

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Definitions:

Average Total Cost

The total cost of production (fixed and variable costs combined) divided by the total quantity of output produced.

Marginal Cost

The price of creating one more unit of a particular product or service.

Marginal Revenue

The additional income generated from selling one more unit of a product or service, crucial for decision-making in production and pricing strategies.

ΔTR/Δq

Represents the change in total revenue divided by the change in quantity sold, indicating marginal revenue.