When Acme Dynamite Produces 250 Units of Output, Its Variable

question 97

Multiple Choice

When Acme Dynamite produces 250 units of output, its variable cost is $2,000, and its fixed cost is $500. It sells each unit of output for $25. If the price of dynamite drops to $10, should Acme Dynamite continue to operate in the short run?

• A)No, because price is less than average total cost.
• B)Yes, because price is less than average variable cost.
• C)No, because price is not greater than average total cost.
• D)Yes, because price is greater than average variable cost.

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Definitions:

Job M381

A specific job or project identifier, often used in job costing scenarios to track costs and monitor progress on a particular task or project.

Departmental Predetermined Overhead Rates

The overhead rates set for specific departments within a company, based on estimated costs and activity levels.

Manufacturing Cost

The total expense incurred in the process of producing a product, including raw materials, labor, and overhead.

Selling Price

The price at which a product or service is offered to consumers.