The Contribution Margin Approach Helps Managers in Short-Term Decision Making

question 103

Multiple Choice

The contribution margin approach helps managers in short-term decision making because it ________.

• A) treats fixed manufacturing overhead as product costs
• B) reports only mixed costs
• C) reports costs and revenues at present value
• D) isolates costs by behavior

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Definitions:

Marginal Cost Curve

A graphical representation that shows how the cost of producing one additional unit varies as production increases.

Average Cost Curve

A graphical representation showing how the cost per unit of producing goods changes with changes in the volume of goods produced, highlighting economies and diseconomies of scale.

Market Level Supply

The total quantity of a good or service that producers are willing to sell across the entire market at a given price level.

Marginal Costs

The swelling of total charges resulting from generating an extra unit of a good or service.