Direct materials are $20, direct labor is $5, variable overhead costs are $15, and fixed overhead costs are $10. In the short term, the incremental cost of one unit is:
A)$15
B)$25
C)$40
D)$50

Question

Quizplus · Accepted Answer

In the short term, the incremental cost includes only variable costs: direct materials ($20), direct labor ($5), and variable overhead ($15), totaling $40. Fixed overhead costs are not included in incremental costs.

Direct Materials Are $20, Direct Labor Is $5, Variable Overhead