When Marginal Cost Is Rising, Average Variable Cost

question 249

Multiple Choice

When marginal cost is rising, average variable cost

• A)must be rising.
• B)must be falling.
• C)must be constant.
• D)could be rising or falling.

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Definitions:

Direct Materials

Raw materials directly traceable to and integral in the production of a finished product, affecting the cost of goods sold (COGS).

Processing Departments

Sections within a manufacturing operation where specific categories of work are performed, each with its own set of production processes and costs.

Conversion Costs

The combined costs of direct labor and manufacturing overhead that are incurred to transform raw materials into finished products.

Factory Supervisor's Salary

The compensation paid to the individual responsible for overseeing the production and personnel in a manufacturing plant.