Marginal Cost Is Equal to Average Variable Cost When Average

question 4

Multiple Choice

Marginal cost is equal to average variable cost when average variable cost is

• A) zero.
• B) at its minimum.
• C) at its maximum.
• D) equal to total variable cost.

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Definitions:

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the standard cost of the variable overhead allotted for the actual production level.

Supplies

Materials and items that are used in the day-to-day operations of a business but are not directly tied to the production of goods or services.

Variable Overhead Efficiency Variance

The difference between the expected (standard) cost of variable overheads based on actual production and the actual cost incurred.

Variable Overhead Efficiency Variance

A measure that reflects the efficiency of variable overhead resource usage by comparing the standard hours allowed with the actual hours used.