Average Total Cost Is Very High When a Small Amount

question 211

Multiple Choice

Average total cost is very high when a small amount of output is produced because

• A)average variable cost is high.
• B)average fixed cost is high.
• C)marginal cost is high.
• D)marginal product is high.

---

Definitions:

Customizing Department

A specialized division within a company that modifies products to meet specific customer requirements or preferences.

Predetermined Overhead Rate

A calculated rate intended for the allocation of manufacturing overhead to products, based on a specific activity or cost driver.

Machine-Hours

A unit of measure representing the operation of a machine for one hour, often used in manufacturing for costing purposes.

Machining Department

A specific section within a manufacturing facility where machining processes such as cutting, shaping, and drilling materials take place.