A Firm's Average Variable Cost Is $90, Its Total Fixed

question 5

Multiple Choice

A firm's average variable cost is $90, its total fixed cost is $10,000, and its output is 1,000 units. Its total cost is

• A) less than $85,000.
• B) between $85,000 and $95,000.
• C) between $95,000 and $105,000.
• D) more than $105,000.

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Definitions:

Revenue Variance

The difference between actual revenue and budgeted or forecasted revenue.

Revenue And Spending Variances

The differences between the actual amounts of revenue and spending and their budgeted or forecasted amounts, analyzed for budget control.

Flexible Budget

A flexible budget is an estimation tool that adjusts for changes in the volume of activity, allowing for a more realistic comparison of actual to budgeted performance.

Materials Quantity Variance

A metric measuring the difference between the actual quantity of materials used in production and the expected quantity, multiplied by the standard cost per unit.