If an Increase in Output Results in a Decrease in Average

question 104

Multiple Choice

If an increase in output results in a decrease in average total cost, the corresponding marginal cost is:

• A) less than average total cost.
• B) greater than average total cost.
• C) equal to average total cost.
• D) negative.

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Definitions:

Sales Forecast

An estimate of the amount of sales that a business expects to achieve in a future period.

Finished Goods Inventory

Finished Goods Inventory consists of all completed products that are ready for sale but have not been sold yet.

Production Units

The measurable amount of goods or services produced over a specific period of time.

Master Budgeting

A comprehensive financial planning document that encompasses all of a company’s budgets, including sales, production, and financial budgets.