Paula's Kennels is located in a small city in Nova Scotia. The company employs three pet attendants, four pet groomers, and two front office staff who book appointments and keep records. The Kennel provides a range of services for dogs and cats including boarding, grooming, and obedience training. The grooming area includes a small retail section that carries dog and cat food, pet supplies, and toys. Assume Paula's Kennels is currently boarding ten pets. The cost of food to board one more pet is best described as a:
A) Fixed cost
B) Marginal cost
C) Sunk cost
D) Mixed cost

Question

Quizplus · Accepted Answer

The cost of food to board one more pet is a marginal cost, as it represents the increase in cost resulting from boarding one additional pet. The other options are not applicable in this scenario:

A) Fixed cost: A fixed cost does not change with the level of production or service provided, and is typically associated with costs such as rent or salaries that are paid regardless of the number of pets boarded.

C) Sunk cost: A sunk cost is a cost that has already been incurred and cannot be recovered, and is therefore irrelevant for decisions regarding future actions.

D) Mixed cost: A mixed cost includes both fixed and variable components, and is not applicable in this scenario as there is no indication of any such cost.

Paula's Kennels Is Located in a Small City in Nova