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Principals are liable for the acts of independent contractors if:
Average Costs
The total costs divided by the number of units produced, giving a per unit cost average.
Total Variable Cost
The sum of all costs that vary with output level, including materials, labor, and other costs that increase with production volume.
Relevant Range
The range of activity within which the assumptions about fixed and variable cost behavior are valid.
Average Costs
The total costs (fixed and variable) divided by the total quantity produced, representing the cost per unit of production.
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