If It Costs the Delicious Donuts Firm $400 to Produce

question 102

Multiple Choice

If it costs the Delicious Donuts firm $400 to produce 2000 donuts, the average cost for each donut is:

• A) $0.50
• B) $0.80
• C) $5.00
• D) $0.20

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Definitions:

Sales Price

The financial value assigned to a product or service available for purchase in the market.

Variable Costs

Costs that vary directly with the level of production or sales volume, such as raw materials and direct labor expenses.

Variable Cost

Expenses incurred by a business that vary directly with the level of production or sales volume, such as cost of goods sold.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time, used to assess the profitability of investments.