What Is Average Fixed Cost

question 150

Multiple Choice

What is average fixed cost?

• A)It is all the costs that do not vary with the level of output.
• B)It is total cost less total variable cost.
• C)It is total fixed cost divided by the level of output.
• D)It is total fixed costs less total variable costs.

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Definitions:

LIFO

An inventory valuation method that assumes the last items added to the inventory are the first ones to be sold ("Last In, First Out").

Weighted Average

A calculation that takes into account the different degrees of importance of the numbers in a dataset, making some values count more heavily than others.

Cost Flow Assumption

Accounting methods used to determine the cost of goods sold and ending inventory, such as FIFO (First-In, First-Out) or LIFO (Last-In, First-Out).

Weighted Average

A mathematical calculation that takes into account both the numbers and their weights, resulting in a figure that reflects their combined effect.