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Programs such as Steam distribute more and more video games. Purchasers buy the game and download it immediately to their computer. If the entire system is automated, estimate the marginal cost of producing and selling video games this way (ignore electricity costs) .
Traditional Costing
An accounting method that applies indirect costs to products based on a predetermined overhead rate.
Activity-Based Costing
An accounting method that assigns costs to products or services based on the activities they require, aiming for more accurate costing.
Overhead Rate
A calculation used to allocate overhead costs to produced goods or services, typically based on a specific activity base such as labor hours or machine hours.
Predetermined Overhead Rate
A rate calculated at the beginning of the period by dividing estimated total overhead costs by an estimated allocation base, used to apply overhead costs to products or services.
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