What Is the Average Fixed Cost When Output Is 120

question 57

Multiple Choice

What is the average fixed cost when output is 120 units in Figure 21.2?

• A) $0.67.
• B) $80.00.
• C) $96.00.
• D) $208.00.

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Definitions:

Markup

The difference between the cost of a product or service and its selling price, expressed as a percentage over the cost.

Absorption Costing

A calculation technique in which the cost of a product is determined by including all costs associated with manufacturing, including direct materials, direct labor, as well as variable and fixed overhead costs.

Cost-plus Pricing

A pricing strategy where a fixed percentage is added to the total cost of producing a product to determine its selling price.

Return on Investment

A measure of performance that evaluates the efficiency or profitability of an investment relative to its cost.