Which of the Following Formulas Defines Average Cost

question 62

Multiple Choice

Which of the following formulas defines average cost?

• A)AC = TC/Q
• B)AC = MRP = MFC
• C)AC = MPP/Q
• D)AC = TC − Q

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Definitions:

Break-Even Volume

is the quantity of sales necessary to cover all fixed and variable costs, resulting in zero profit or loss.

Break-Even Point

The point at which total costs equal total revenue, meaning there is no profit or loss.

Total Sales

The aggregate revenue a company generates from selling goods or services within a specified period.

Fixed Costs

Costs that do not fluctuate with changes in production level or sales volume, such as rent, salaries, and insurance.