Use the Following to Answer Question(s): Short-Run Costs

question 120

Multiple Choice

Use the following to answer question(s) : Short-Run Costs

-(Exhibit: Short-Run Costs) At 6 units of output, average total cost is approximately:

• A) $50.
• B) $70.
• C) $120.
• D) $150.

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Definitions:

Direct Labor-hours

A measure of the amount of time spent by workers who are directly involved in the manufacturing process.

Variable Overhead Item

Costs that vary with the level of production output, such as utilities or materials, and are not fixed over the short term.

Rate Variances

The difference between the actual rate paid for inputs and the standard rate expected, often analyzed for labor or overhead rates.

Efficiency Variances

The difference between the actual amount of an input used and the expected (or standard) amount needed, multiplied by the standard cost per unit of input.