Assume Both the Marginal Cost and the Average Variable Cost

question 81

Multiple Choice

Assume both the marginal cost and the average variable cost curves are U-shaped. At the minimum point on the AVC curve, marginal cost must be:

• A) greater than the average variable cost.
• B) ​less than the average variable cost.
• C) ​equal to the average variable cost.
• D) ​at its minimum.

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Definitions:

Total Price Variance

The difference between the actual cost of a good or service and its expected cost based on standard pricing.

Quantity Variances

Differences between actual and expected (or standard) quantities of inputs or outputs in the production process, affecting costs.

Standard Cost Sheet

A document that outlines the expected costs associated with the production of a product, including materials, labor, and overhead.

Labor Price Variance

The difference between the actual cost of direct labor and the standard cost of labor that was expected during a period.