A General Rule to Use in Assessing the Average Collection

question 127

Multiple Choice

A general rule to use in assessing the average collection period is that it

• A)should not exceed 30 days.
• B)can be any length as long as the customer eventually pays his account.
• C)should not greatly exceed the discount period.
• D)should not greatly exceed the credit period.

---

Definitions:

Average-Variable-Cost Curve

A graphical representation showing how the average variable cost of production changes as the quantity of output is altered.

Average Variable Cost

The sum of all costs that vary with output levels, divided by the total quantity of produced output.

Average Total Cost

The aggregate expense of manufacturing (comprising both fixed and variable expenditures) divided by the overall amount produced.

Marginal Cost

The incremental cost of producing an extra unit of a good or service.