As a Way to Save Costs, the Foundry Inc

question 7

Multiple Choice

As a way to save costs, The Foundry Inc. set up a factory in a foreign country to produce the component parts it uses in the farm equipment it manufactures. The technology at this factory is kept to a minimum and management has no say in purchasing or production decisions. What type of factory is Foundry Inc. using?

• A) server
• B) outpost
• C) contributor
• D) source
• E) offshore

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Definitions:

Average Variable Cost

The total variable cost divided by the quantity of output produced; it varies with production levels.

Average Fixed Cost

The constant expenses associated with production, which remain unaffected by the amount of goods produced, divided by the number of items made.

Average Variable Cost

The total variable cost of production divided by the quantity of output produced.

Average Total Cost

The total cost of production divided by the quantity of output produced, illustrating the average cost per unit of output.