The Underlying Assumption That Requires That Domestic Currency Be Measured

question 30

Multiple Choice

The underlying assumption that requires that domestic currency be measured at its face value is the:

• A)cost assumption.
• B)unit-of-measure assumption.
• C)monetary unit assumption.
• D)purchasing power assumption.

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Definitions:

Average Costs

The total costs divided by the number of units produced, giving a per unit cost average.

Total Variable Cost

The sum of all costs that vary with output level, including materials, labor, and other costs that increase with production volume.

Relevant Range

The range of activity within which the assumptions about fixed and variable cost behavior are valid.

Average Costs

The total costs (fixed and variable) divided by the total quantity produced, representing the cost per unit of production.