Using the table, determine the average fixed cost of producing 40 units.
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
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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fromChapter 4 / Lesson 8
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.