Refer to Table 7-4

question 32

Multiple Choice

Refer to Table 7-4. If the output equals five watches per week, what is the average fixed cost and average variable cost of production?

• A) AFC is $50 and AVC is $45
• B) AFC is $9 and AVC is $10
• C) AFC is $10 and AVC is $9
• D) AFC is $45 and AVC is $50

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of goods sold in a company, including materials and labor.

Average Inventory

A measure used to estimate the value of inventory over a certain period by averaging the beginning and ending inventory.

Ending Inventory

The total value of goods available for sale at the end of an accounting period, crucial for calculating cost of goods sold.

Cost of Goods Sold

Direct costs attributable to the production of the goods sold by a company, including materials and labor.