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The Types of Costs Included in the Product Cost Differ

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Essay

The types of costs included in the product cost differ depending on the purpose of the costing.Describe the generic value chain categories that are pertinent to product costs regarding GAAP-compliant inventoriable costs;and,product costs for product pricing and product mix decisions.


Definitions:

Output

The total amount of something produced by a person, machine, or industry.

Average Variable Cost

The total variable costs (costs that change with production levels) divided by the quantity of output produced.

Output

The total quantity of goods or services produced within a specific period by a firm or industry.

Diminishing Marginal Returns

A principle stating that as additional units of a variable input are added to a fixed input, the additional output from each new unit of input will eventually decrease.

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