For a Business That Offers Customers a Store Where Product

question 28

Multiple Choice

For a business that offers customers a store where product can be purchased and picked up or a delivery service that can ship the product directly to the customer, which of the following would most likely be the best cost allocation base for distribution costs?

• A) number of customer service phone calls and emails per period
• B) number of pounds of product shipped or delivered
• C) Electricity costs for the period
• D) Number of products sold

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Definitions:

Marginal Revenue

The surplus earnings acquired through the sale of an extra product or service unit.

Increasing Output

The process of raising the quantity of goods or services produced by a company or economy, often aiming for higher efficiency and profitability.

Marginal Analysis

The examination of the additional benefits of an activity compared to the additional costs incurred by that same activity.

Total Cost

The sum of all expenses incurred in the production of goods or services, including both fixed and variable costs.