Average Total Cost Tells Us The

question 136

Multiple Choice

Average total cost tells us the:

• A)cost of the last unit of output if total cost does not include a fixed cost component
• B)cost of a typical unit of output if total cost is divided evenly over all the units produced
• C)variable cost of a firm that is producing at least one unit of output
• D)total cost of the first unit of output if total cost is divided evenly over all the units produced

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Definitions:

Cost Pools

Groupings of individual costs based on their shared function or similarity, used in the allocation of costs to products or services.

ABC Systems

Activity-Based Costing systems, which allocate overhead costs based on the activities that drive those costs, providing more accurate cost information.

Cost Drivers

Factors that cause the cost of an activity or process to change, used in strategic management to control and reduce costs.

Volume

The quantity of something, often used to refer to the total amount of stocks or contracts traded in a financial market.