Table 15-7 Sally Owns the Only Shoe Store in Town. She Has

question 383

Multiple Choice

Table 15-7
Sally owns the only shoe store in town. She has the following cost and revenue information.
-Refer to Table 15-7. What is the marginal cost of the 8th pair of shoes?

• A)$50
• B)$60
• C)$90
• D)$110

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Definitions:

Variable Costing

A pricing approach that incorporates solely the variable costs of production—such as direct materials, direct labor, and variable manufacturing overhead—into the cost per unit of products.

Variable Production Costs

Costs that vary directly with the level of production, such as raw materials and direct labor.

Product Costs

All costs that are involved in acquiring or making a product. In the case of manufactured goods, these costs consist of direct materials, direct labor, and manufacturing overhead. Also see Inventoriable costs.

Absorption Costing

A costing method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed manufacturing overhead—in unit product costs.