Suppose a Firm Has an Output of 10,000 Cans and a Total

question 122

Multiple Choice

Suppose a firm has an output of 10,000 cans and a total fixed cost of $2,000. At an output of 5,000 the difference between the total cost and the total variable cost is:

• A) b and c.
• B) $0.40.
• C) the average fixed cost.
• D) $2,000.
• E) $0.20.

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Definitions:

Ending Fixed Assets

The value of a company's physical assets, such as property, buildings, and machinery, at the end of an accounting period.

Cash Flow From Assets

The total of cash flow to bondholders and cash flow to shareholders, consisting of operating cash flow, capital spending, and additions to net working capital.

EBIT

Earnings Before Interest and Taxes, a measure of a company's profitability based purely on operational and business activities without considering interest and tax expenses.

Depreciation

An accounting method used to allocate the cost of a tangible asset over its useful life.