All of the Following Are True About Average Cost Per

question 1

Multiple Choice

All of the following are true about average cost per unit except:

• A) Average cost equals variable cost per unit plus average fixed cost per unit
• B) Average costs are used in financial statements
• C) Average costs are usually irrelevant for decision-making because they include a portion of fixed cost.
• D) Average costs are usually good estimates of future costs

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Definitions:

Value-Irrelevant

Financial information or factors that do not impact an investor's or decision maker's assessment of a company's value.

Reported Earnings

The net income that a company reports to its investors and shareholders, often found on its income statement.

Abnormal Earnings

Profits that exceed or fall short of the expected normal return for a given year or period.

Cutting Costs

Refers to actions implemented by a business to reduce expenses and improve profitability.