The Cost of Producing One Additional Unit of a Product

question 11

Multiple Choice

The cost of producing one additional unit of a product is called ________.

• A) Cost of goods sold
• B) Cost of materials
• C) Cost of services sold
• D) Cost of utilities
• E) Cost of lease

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Definitions:

Commitment Fee

A banking charge imposed on a borrower to keep a line of credit open or to guarantee a loan's terms.

Bank Line

A bank line or line of credit is an arrangement between a financial institution and a customer that sets the maximum loan balance that the borrower can access.

Interest Payments

Interest payments are the amounts paid by borrowers to lenders as compensation for the use of borrowed money or assets, typically expressed as an annual percentage rate.

Compensating Balances

Compensating balances are minimum account balances that a company agrees to maintain in a bank account as part of a borrowing arrangement to offset bank service charges or qualify for better loan terms.