-Figure 7-6 Shows the Total Cost for Six Different Levels

question 9

Multiple Choice

-Figure 7-6 shows the total cost for six different levels of output for a particular firm.What is the average total cost (ATC) of producing four units of output?

• A)$2,600
• B)$200
• C)$650
• D)$50
• E)$10,400

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Definitions:

Total Cost

The complete cost of producing or acquiring goods or services, including both fixed and variable components.

Direct Material Quantity Variance

The difference between the expected and actual quantity of materials used in production, affecting the total manufacturing cost.

Direct Labour Rate Variance

The difference between the actual cost of direct labor and the standard cost, which shows how well labor costs are being managed.

Direct Labour Efficiency Variance

The difference between the expected amount of labor hours needed to produce a given level of output and the actual labor hours used.