Figure 13-6 the Curves Below Reflect Information About the Cost Structure of Structure

question 170

Multiple Choice

Figure 13-6
The curves below reflect information about the cost structure of a firm.

-Refer to Figure 13-6.Which of the curves is most likely to represent average fixed cost?

• A)A
• B)B
• C)C

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Definitions:

Variable Overhead Efficiency

The variance indicating the efficiency with which a variable overhead cost is incurred in relation to an activity level, such as machine or labor hours.

Rate Variance

The difference between the actual rate paid for an item or service and the expected (standard) rate, used in budgeting and cost control.

Budget Variance

A measurement of the difference between the budgeted or planned amount of expense or revenue, and the actual amount incurred/sold.

Predetermined Overhead Rate

An estimated charge used to distribute overhead costs to products or projects, based on an expected standard, allowing for cost allocation before actual expenses are known.