Marginal Cost

question 91

Multiple Choice

Marginal cost

• A) is the difference between total cost and total fixed cost.
• B) increases as the marginal product of labor increases.
• C) decreases as the average product of labor increases.
• D) is the change in total cost arising from a one-unit increase in output.
• E) equals the change in variable cost divided by the change in fixed cost when output increases by one unit.

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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.