Which of the Following Formulas Defines Average Cost

question 62

Multiple Choice

Which of the following formulas defines average cost?

• A)AC = TC/Q
• B)AC = MRP = MFC
• C)AC = MPP/Q
• D)AC = TC − Q

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Definitions:

Direct Method

An approach in cost accounting that allocates service department costs directly to production departments without considering inter-service department flows.

Operating Expenses

Costs associated with the day-to-day operations of a business, excluding direct labor and materials.

Accrued Expenses

Expenses that have been incurred but not yet paid or recorded in the company's ledger during an accounting period.

Spreadsheet Method

The spreadsheet method involves using software applications with rows and columns to organize, calculate, and analyze data, often for accounting and financial planning.