Which of the Following Must Be True If Average Total

question 89

Multiple Choice

Which of the following must be true if average total cost is rising?

• A) Average fixed cost must be rising.
• B) Total fixed cost must be rising.
• C) Average variable cost must be falling.
• D) Marginal cost must be greater than average total cost.

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Definitions:

Activity Index

A measure used to allocate overhead costs, based on activities that drive costs such as machine hours or labor hours.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity, allowing for more accurate budgeting.

Activity Index

A measure or indicator used to assess the level or intensity of activity within a certain area or field.

Variable Costs

Expenses that change in proportion to the activity of a business, such as production volume or sales.