Using the table, determine the average fixed cost of producing 40 units....

Question:

Using the table, determine the average fixed cost of producing 40 units.

QFCVC
05000
8500250
17500500
27500750
405001000
545001250
665001500
765001750
845002000
915002250
965002500

A. $12.00

B. $12.50

C. $18.52

D. $25.00

Cost Behavior:

The raw material cost is a variable cost and depreciation expense on the machinery is a fixed cost. The determination of to which category the costs should be allocated is based on their cost behavior to the activity level.

Answer and Explanation: 1

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Answer and Explanation:

The answer is B. $12.50

The average cost at the production level of 40 units:

  • The total fixed cost is $500 for the relevant...

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Average Cost Vs. Total Cost: Making Production Decisions in the Short-Run

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Chapter 4 / Lesson 8
12K

Learn what the average cost of a firm is and how it differs from total cost. Understand the distinction between short run and long run average total cost.


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