Using the Diagram Below, Which of the Following Would Be

question 32

Multiple Choice

Using the diagram below, which of the following would be a likely mathematical expression for Total Cost? ​ ​

• A)Total Cost = Total Variable Cost × Fixed Cost
• B)Total Cost = Fixed Cost + Total Variable Cost
• C)Total Cost = Total Variable Cost + Total Revenue × Production Volume
• D)Total Cost = Fixed Cost + Total Variable Cost + Production Volume

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Definitions:

Variable Costs

Expenses that vary directly with the level of production or sales, such as materials and labor.

Break-even Sales

The amount of revenue required to cover total fixed and variable costs, resulting in zero profit or loss.

Fixed Costs

Expenses that do not change in proportion to the activity of a business, such as rent, salaries, and insurance premiums, remaining constant regardless of variations in business activity.

Variable Costs

Expenses that change in proportion to the activity of a business, such as materials or labor directly tied to production volume.