The costs that an organization incurs even when there is little or no activity are fixed costs or overhead Finding Marginal Cost Variable costs are usually associated with labor and raw materials and change with the businesss rate of operation or output ID: 1028220
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1. Lesson 5-3: Cost, Revenue, & Profit Maximization
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3. The costs that an organization incurs even when there is little or no activity are fixed costs, or overhead.Finding Marginal Cost
4. Variable costs are usually associated with labor and raw materials and change with the business’s rate of operation or output.Finding Marginal Cost
5. Total cost is the sum of fixed and variable costs.Finding Marginal Cost
6. Marginal cost is the extra cost incurred to produce one more unit of output.Finding Marginal Cost
7. Average revenue is the average price of every unit of output.Total revenue is all of the revenue a business receives.Finding Marginal Revenue
8. Marginal revenue is the extra revenue a business receives from the production and sale of one additional unit of output.Marginal revenue is the most important measure of revenue.Finding Marginal Revenue
9. Profitability is affected by both costs and revenue.The profit-maximizing quantity of output is the volume of production where marginal cost and marginal revenue are equal.Profit Maximization and Break-Even
10. The break-even point is the level of production that generates just enough revenue to cover total operating costs.Profit Maximization and Break-Even
11. Profit Maximization and Break-EvenThe Internet is one of the fastest-growing areas of business today.E-commerce has much lower overhead and does not require as much inventory as traditional retail stores, so the break-even point of sales is much lower.