Solution 4.1 | ||||||||||||||||||||||||||||||||||||||||
A) Explain the following terms | ||||||||||||||||||||||||||||||||||||||||
The term marginal cost refers to the additional costs incurred in providing a unit of product or service. The term contribution refers to the amount that a product or service contributes towards covering fixed costs. It is simply sales value less variable costs. A fixed cost is a cost that is unaffected by fluctuations in the level of activity (within a relevant range). B) Marginal format Marginal Statement
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