# 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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Chapter 4 / Lesson 8Learn 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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