If the Marginal Cost Curve Is Below the Average Variable

question 206

Multiple Choice

If the marginal cost curve is below the average variable cost curve, then

• A)average variable cost is increasing.
• B)average variable cost is decreasing.
• C)marginal cost must be decreasing.
• D)average variable cost could either be increasing or decreasing.

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Definitions:

Molding Department

A specialized section of a manufacturing company focused on producing parts by shaping materials in molds.

Weighted-Average Method

A costing method that averages all costs and applies them to output, typically used in process costing.

Conversion Cost

The aggregate cost of direct labor and manufacturing overhead associated with converting raw materials into finished goods.

Direct Materials

Raw materials that are directly incorporated into a finished product.