25) The change in variable costs that occurs when production is increased by one

Question

25)

The change in variable costs that occurs when production is increased by one unit is referred to as the:

54)

Oil Wells offers 6.5 percent coupon bonds with semiannual payments and a yield to maturity of 6.94 percent. The bonds mature in seven years. What is the market price per bond if the face value is $1,000?

57)

What is the net present value of a project with the following cash flows and a required return of 15 percent?

$369.38

-$4,012.64

$113.90

$-369.38

-$113.90

58)

Dog Up! Franks is looking at a new sausage system with an installed cost of $348,950. This cost will be depreciated straight-line to zero over the project's six-year life, at the end of which the sausage system can be scrapped for $50,000. The sausage system will save the firm $134,400 per year in pretax operating costs, and the system requires an initial investment in net working capital of $19,500. All of the net working capital will be recovered at the end of the project. The tax rate is 35 percent and the discount rate is 12 percent. What is the net present value of this project?

The change in variable costs that occurs when production is increased by one unit is referred to as the:

Explanation / Answer

Marginal cost

The marginal cost in the additional cost that is used to produce one single unit of the product. It is used to determine the organizations economies of scale. It is also the change in variable costs that occurs when production is increased by one unit.

Hence, the answer is marginal cost.

Therefore, the correct option is A.

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