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.
| Q | FC | VC |
|---|---|---|
| 0 | 500 | 0 |
| 8 | 500 | 250 |
| 17 | 500 | 500 |
| 27 | 500 | 750 |
| 40 | 500 | 1000 |
| 54 | 500 | 1250 |
| 66 | 500 | 1500 |
| 76 | 500 | 1750 |
| 84 | 500 | 2000 |
| 91 | 500 | 2250 |
| 96 | 500 | 2500 |
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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View this answerAnswer 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
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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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