Brady Industries Has Average Variable Costs of $1 and Average

question 178

Multiple Choice

Brady Industries has average variable costs of $1 and average total costs of $3 when it produces 500 units of output. The firm's total fixed costs equal

• A)$2.
• B)$4.
• C)$1,000.
• D)$2,000.

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Definitions:

Interest Expense

Interest expense is the cost incurred by an entity for borrowed funds, typically evident in the form of interest payments on loans, bonds, or credit lines.

Income Before Interest

The earnings a company generates before interest expenses are deducted, used to analyze the profitability of operations without the impact of its capital structure.

Current Liabilities

Short-term financial obligations that are due within one year or within the normal operating cycle of a business.

Current Liabilities

Obligations that a company is expected to pay within one year or within its normal operating cycle, whichever is longer, including accounts payable, short-term loans, and taxes payable.