The term incremental cost refers to
A)the profit foregone by selecting one choice instead of another.
B)the additional cost of producing or selling another product or service.
C)a cost that continues to be incurred in the absence of activity.
D)a cost common to all choices in question and not clearly or feasibly allocable to any of them.

Question

Quizplus · Accepted Answer

Incremental cost refers to the additional cost required to produce or sell an additional unit of a product or service. It is also known as marginal cost. It is important to consider incremental costs when making business decisions about production levels, pricing, and investment opportunities. A is incorrect because it refers to opportunity cost, which is a different concept. C and D are incorrect because they do not refer specifically to the additional cost of producing or selling another unit.

The Term Incremental Cost Refers to