If You Can Make a Good at a Low Opportunity

question 50

Multiple Choice

If you can make a good at a low opportunity cost,

• A)you would be well served to produce that good and trade for other goods.
• B)you should make something else that has a higher value.
• C)you should make something else that has a higher opportunity cost.
• D)none of the above

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Definitions:

Indirect Manufacturing Costs

These are costs that cannot be directly traced to specific units produced, such as maintenance and cleaning, and are part of the manufacturing overhead.

Incremental Manufacturing Cost

Refers to the additional cost incurred for producing one more unit of a product.

Contribution Margin

The amount remaining from sales revenue after all variable expenses have been deducted, indicating how much revenue is available to cover fixed costs and generate profit.

Direct Manufacturing Cost

The sum of all the costs directly associated with the production of a good, including raw materials and direct labor.