If Fixed Cost Is $200,000 and Variable Cost Is $30

question 97

Multiple Choice

If fixed cost is $200,000 and variable cost is $30 per unit over the relevant range of output, when 10,000 units are produced, the average total cost will be:

• A) $20.
• B) $30.
• C) $50.
• D) $70.

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Definitions:

Cost of Goods Sold

The immediate expenses directly linked to the manufacturing of products sold by a firm, such as labor and materials used.

Finished Goods Inventories

The stock of completed products that are ready to be sold but have not yet been purchased or distributed.

Credit Balance

The amount of money credited to an account, indicating the sum that a financial institution or vendor owes to the account holder.

Manufacturing Overhead

A rephrasing of Factory Overhead, encompassing all indirect costs associated with the manufacturing process, such as utilities, maintenance, and management salaries.