Because the Fixed Costs of Production Do Not Change in the Short

question 25

Multiple Choice

Because the fixed costs of production do not change in the short run, the total fixed cost divided by the number of units is known as the short-run

• A) average variable cost function
• B) marginal cost function
• C) average fixed cost function

---

Definitions:

Raw Materials Inventory

Raw materials inventory represents the cost of materials that are in stock but have not yet been processed into finished goods.

Direct Labor Cost

The compensation and associated costs for workers directly engaged in the manufacturing of products or services.

Manufacturing Overhead

All indirect costs associated with the production process, such as utilities, maintenance, and salaries of supervisors.

Total Manufacturing Costs

The sum of direct materials, direct labor, and manufacturing overhead incurred in producing goods.