"Marginal Cost" Is

question 292

Multiple Choice

"Marginal cost" is:

• A) always less than average variable cost.
• B) more affected by fixed costs than by variable costs.
• C) the change in total cost that results from producing one more unit.
• D) All of the above.
• E) None of the above.

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Definitions:

Traditional Costing System

A traditional costing system allocates indirect costs to products based on a single measure of activity, such as machine hours or direct labor hours, often not capturing the true costs of complex production processes.

Batch-level Costs

Costs associated with a specific batch of products, including setup costs and quality testing, that are not directly related to the manufacturing of individual items within the batch.

Activity-based Costing

An accounting method that assigns costs to products or services based on the activities and resources that go into their production.

Activity-Based Costing

A pricing strategy that allocates overhead and indirect expenses to specific products and services according to the activities they necessitate.