(Figure: Total Cost and Quantity of Output VI) Answer the Following

question 154

Multiple Choice

(Figure: Total Cost and Quantity of Output VI) Answer the following question.
At an output level of 3, the average total cost is $____.

• A) 6
• B) 2.5
• C) 2
• D) 1

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Definitions:

Standard Labor Rate

The predetermined cost per hour for labor, used in budgeting and costing calculations.

Standard Machine-Hours

A predetermined amount of time that should be required to complete a task or produce a product on a machine, used for planning and efficiency analyses.

Variable Overhead Efficiency Variance

The difference between the actual hours taken to produce something and the standard hours expected, multiplied by the variable overhead rate per hour.

Manufacturing Overhead

All indirect costs associated with manufacturing a product, excluding direct materials and direct labor costs.