Which of the Following Must Always Be True as the Quantity

question 165

Multiple Choice

Which of the following must always be true as the quantity of output increases?

• A)Marginal cost must rise.
• B)Average total cost must rise.
• C)Average variable cost must rise.
• D)Average fixed cost must fall.

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Definitions:

Factory Overhead

All the supplementary costs tied to manufacturing, aside from the expenses of direct materials and direct labor.

Amortization

The periodic transfer of the cost of an intangible asset to expense.

Direct Labor Used

The total hours worked by employees directly involved in the production process, impacting manufacturing costs.

Prime Costs

The combined costs of direct materials and direct labor involved in manufacturing a product.