If, for the Last Bushel of Apples Produced and Sold

question 48

Multiple Choice

If, for the last bushel of apples produced and sold by an apple farm, marginal revenue exceeds marginal cost, then in producing that bushel, the farm

• A)added more to total cost than it added to total revenue.
• B)added an equal amount to both total revenue and total cost.
• C)added more to total revenue than it added to total cost.
• D)maximized its profits or minimized its losses.

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Definitions:

Product Cost

The total amount of expenses incurred to produce a product, including direct labor, materials, and overhead.

Period Cost

Expenses that are not directly tied to the production process and are expensed in the period they are incurred, such as selling, general, and administrative expenses.

Goods Manufactured

The total value or volume of products that have been completed and are ready for sale during a specific accounting period.

Ending Work

Often referred to the ending work in process (WIP) inventory, it represents the value of products that are partially completed at the end of an accounting period.