What Is Average Total Cost Equal to

question 143

Multiple Choice

What is average total cost equal to

• A)output divided by total variable cost
• B)average cost minus average quantity of output
• C)average variable cost plus total fixed cost
• D)total cost divided by output

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Definitions:

Manufacturing Overhead Cost

The indirect factory-related costs that are incurred when a product is manufactured, including costs related to maintaining the factory.

Conversion Cost

The sum of direct labor costs and manufacturing overhead expenses involved in converting raw materials to finished products.

Total Variable Cost

The sum of all variable expenses that change in proportion with production output or business activity levels.

Contribution Margin

The amount by which sales revenue exceeds variable costs, indicating how much revenue contributes to fixed costs and profit.