If the Variable Cost of Producing Five Pairs of Shoes

question 162

Multiple Choice

If the variable cost of producing five pairs of shoes is $50 and the variable cost of producing six pairs is $80, which statement is TRUE?

• A) The marginal cost of the sixth pair is $80.
• B) The total cost of producing six pairs is $130.
• C) The average variable cost of the sixth pair is $10.
• D) The average variable cost of the fifth pair is $10.

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Definitions:

U.S. GAAP

U.S. GAAP, or United States Generally Accepted Accounting Principles, is a collection of accounting standards and procedures for companies to follow when compiling their financial statements in the U.S.

Accounting Treatment

The methodology and guidelines used to represent an accounting process or transaction in the financial statements, according to principles of accounting standards.

Comparability

An accounting principle that allows financial information to be compared across different periods or companies for analysis.

Financial Information

Data related to the financial status and activities of an individual, company, or organization.