Marginal Cost

question 440

Multiple Choice

Marginal cost

• A)equals both average variable cost and average total cost at their respective minimums.
• B)is the difference between total cost and total variable cost.
• C)rises for a time but then begins to decline when diminishing returns set in.
• D)declines continuously as output increases.

---

Definitions:

Manufacturing Overhead

Costs related to the manufacturing process that cannot be directly linked to specific products, including utility costs, depreciation, and maintenance of equipment.

Predetermined Overhead Rate

An allocated rate used to apply manufacturing overhead to products or job orders, estimated at the start of an accounting period.

Job-Order Costing

A costing system used to accumulate costs for individual jobs or orders, typically used when products or services are distinct and customized.

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate estimated overhead costs to products or job orders based on a selected activity base.