Table 14-1 -Refer to Table 14-1. If the Firm Doubles Its Output

question 397

Multiple Choice

Table 14-1
-Refer to Table 14-1. If the firm doubles its output from 3 to 6 units, total revenue will

• A)increase by less than $15.
• B)increase by exactly $15.
• C)increase by more than $15.
• D)Total revenue cannot be determined from the information provided.

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Definitions:

Variable Costing

This is an accounting method that only includes variable costs—costs that change with production volume—in the calculation of product cost.

Total Contribution Margin

The difference between total sales revenue and total variable costs, indicating the total earnings available to cover fixed expenses and generate profit.

Variable Costing

An accounting method that only includes variable production costs (materials, labor, and overhead) in product costs, with fixed overhead expenses treated as period costs.

Net Operating Income

Net Operating Income (NOI) is a measure of a company's profitability from its core business operations, excluding expenses and revenues from financing and investing activities.