If Fixed Costs Are $200,000 and Variable Costs Are $30

question 218

Multiple Choice

If fixed costs are $200,000 and variable costs are $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:

Amortisation

The systematic allocation of the depreciable amount of an intangible asset over its useful life.

Impairment

A reduction in the recoverable value of an asset below its carrying amount on the balance sheet, leading to a write-down of its value.

Intangible Assets

Non-physical assets owned by a business that have a useful life, such as patents, trademarks, and copyrights.

Capitalised

Expenses or costs that are added to the cost basis of a fixed asset on a company's balance sheet, rather than being expensed immediately.