Decision Making on the Margin Involves

question 275

Multiple Choice

Decision making on the margin involves

• A) comparing the marginal cost and marginal benefits when making a decision.
• B) comparing the total cost and the total benefit when making a decision.
• C) eliminating the additional cost when making a decision.
• D) determining the total benefits of a decision.
• E) comparing the benefits from the social interest to the benefits from the person's self-interest.

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Definitions:

Plantwide Overhead Rate

A single rate used to allocate manufacturing overhead costs to all units produced, regardless of the product line.

Cost Driver

A factor that causes the cost of an activity or process to change, used in activity-based costing to allocate costs.

Dual Rate

A cost allocation method that separates costs into fixed and variable elements, applying different rates for each in costing calculations.

Single Rate

A method used in cost accounting where a single overhead rate is applied to all units produced, regardless of the department in which they were produced or the resources they consumed.