Refer to the Following:
the Capital Stock Is Fixed at 5

question 34

Multiple Choice

Refer to the following:
The capital stock is fixed at 5 units, the price of capital is $60 per unit, and the price of labor is $20 per unit.

$$\begin{array} { c c } \text { units of } & \text { units of } \\\text { Labor } & \text { Output } \\\hline 2 & 10 \\4 & 26 \\0 & 46 \\8 & 60 \\10 & 72 \\12 & 80\end{array}$$
-How much does the 12th unit of output add to the firm's total variable cost?

• A) $2.50
• B) $4
• C) $5
• D) $20
• E) $40

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production or purchase of the goods sold by a company during a given period.

Supplies

Materials and items that are used in the day-to-day operations of a business but which do not form part of the final product.

Freight-in

Freight-in refers to the shipping cost associated with getting goods from the supplier to their location, which is part of the inventory cost.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a company's assets over their useful lives.