If Average Fixed Costs Equal $60 and Average Total Costs

question 214

Multiple Choice

If average fixed costs equal $60 and average total costs equal $120 when output is 100, the total variable cost must be

• A) $40.
• B) $60.
• C) $6,000.
• D) $8,000.

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Definitions:

Purchase Price Variances

The difference between the actual cost of purchased materials and the expected (or standard) cost, which can indicate efficiency or market condition changes.

Standard Cost

Predetermined cost calculated for the production of a product or performance of a service under normal conditions.

Operator Training

The process of teaching operators to run machinery or systems efficiently and safely.

Maintenance

The activities undertaken to keep an asset in working condition or restore it to proper condition.