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Why can firms not always reduce prices until they increase sales and profits?
if marginal production costs exceed marginal revenues, the firm will suffer losses, not profits.
When a firm's marginal revenues are higher than its marginal cost?
Marginal cost is
Are marginal costs relevant costs?
If marginal costs are relevant for specific situation or specific decision making scenario then marginal costs are relevant costs otherwise marginal costs can be irrelevant.
When a firm's marginal revenues are higher than its marginal cost?
Marginal cost is
Where could one learn about marginal costs?
One is able to learn about marginal costs at several different places online, such as at the following websites: the Wikipedia Marginal Costs webpage, Marginal Cost, and Margins.
Profits will be maximized when marginal revenue?
Profits will be maximized when marginal revenue is equal to marginal costs. This will only happen in cases where there are fixed costs.
State the arguments for using marginal costing approach in routine accounting?
- The Marginal costing technique is appropriate for decision making as it highlights those costs (and revenues) which will change as a result of the decision under review being put into effect. - As fixed costs are mostly overheads, and, under marginal costing these are all treated as period costs and charged into the income statement therefore marginal costing avoids arbitrary allocation of overheads to units of output. - Reporting profit on a marginal costing basis will be more closely relates to changes in sales volume and are less affected by changes in inventory levels. - An understanding of the behavior of costs and the implications of contribution is vital for accountants and managers as the use of marginal costing for decision making is universal.
Rational decisions occur when the marginal benefits of an action equal or exceed the marginal costs?
Rational Decision making occurs when marginal benefits of an action exceed the marginal costs
A producers profits are maximized when marginal costs are?
equal to marginal revenue
A producers profits are maximized when marginal costs are .?
equal to marginal revenue
How does cost-volume-profit model accommodate nonlinear costs and revenues?
non-linear costs and revenues are ignored by the model
How can marginal revenew and marginal costs help set the most profitable putput level?
The most profitable output level is when marginal costs equals marginal revenue. When marginal revenue is larger than marginal cost, that means that more product can be produced for more profit.
