If the Variable Cost of Producing Five Pairs of Shoes

question 317

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 $30.
• B) The average total cost of the sixth pair is $13.33.
• C) The fixed cost of producing six pairs is $40.
• D) The total cost of producing five pairs is $130.

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Definitions:

Subsidiary's Adjusted Income

The net income of a subsidiary company after making adjustments for fair value measurements, currency translation, and other accounting policies.

Dividends

Payments made by a corporation to its shareholder members, distributing a portion of the company's earnings.

Notes Payable

A written promise to pay a specified sum of money, usually with interest, by a certain date, classified as a liability on the balance sheet.

Gross Margin

The difference between revenue and cost of goods sold, expressed as a percentage of revenue, indicating the financial health of a company’s sales.