For Which of the Following Is a Cost Formula Developed

question 2

Multiple Choice

For which of the following is a cost formula developed for activity flexible budgeting?

• A) each activity as a function of activity drivers
• B) each activity as a function of resource drivers
• C) each overhead item as a function of resource drivers
• D) each overhead item as a function of direct labour hours

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Definitions:

Marginal Product

The rise in production resulting from the use of one more unit of input.

Value of the Marginal Product

The extra income produced from the use of an additional unit of input, like capital or labor.

Marginal Product (MP)

The extra output generated from increasing the quantity of a particular input by one, while keeping other inputs unchanged.

Price (P)

The cost necessary to acquire a good or service.