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:

Bad Debts

Unrecoverable accounts receivable that a business deems uncollectible, similar to bad debt expense but focused on the receivable aspect.

Month of Sale

Refers to the specific month in which a sale was completed or recognized, used in accounting and financial reporting.

Merchandise Purchases

The cost of goods bought for resale during a specific accounting period.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company.