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What Is the Shape of Average Cost Curve? Provide the Reason

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What is the shape of average cost curve? Provide the reason for that particular shape.


Definitions:

Standard Costing System

A cost accounting method that assigns a fixed cost to inventory and measures variances against actual production costs to manage business expenses.

Labor Efficiency Variance

The difference between the actual hours worked and the standard hours expected, multiplied by the standard labor rate, indicating efficiency in labor usage.

Direct Labor-Hours

Entire duration of work by employees intricately involved in the manufacturing phase.

Machine-Hours

A measure of production output or activity calculated as the total hours that machines are operated over a specific period.

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