Question

The cost of a product can be measured as any of the following except as one

A. gathered from all areas of the value chain.

B. identified as period cost.

C. designated as manufacturing cost only.

D. explicitly defined by contract.

Answer 1

The cost of a product cannot be measured as explicitly defined by contract alone, but also through average cost and marginal cost calculations.

Step-by-step explanation:

The cost of a product cannot be explicitly defined by contract alone. Costs are measured in other ways as well. Average cost (AC) is the total cost (TC) divided by the quantity of output (Q), providing the cost per unit of producing a certain quantity.

For instance, if producing two widgets costs $44, the average cost per widget is $22. On the other hand, marginal cost (MC) is the cost of producing one additional unit of output, calculated as the change in total cost (ATC) divided by the change in output (AQ). For example, if the cost goes from $32.50 for one widget to $44 for two, the marginal cost of the second widget is $11.50.