A Firm's ______ Cost Is Equal to the Sum of the ______

question 63

Multiple Choice

A firm's ______ cost is equal to the sum of the ______ costs of the individual units it produces.

• A) total; average
• B) variable; average
• C) total; marginal
• D) variable; marginal

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Definitions:

Overhead Volume Variance

This measures the difference between the budgeted fixed manufacturing overhead and the applied manufacturing overhead, based on the actual production volume.

Capacity Utilization

Refers to the percentage of total potential output that is actually being produced at a given time, measuring the efficiency with which a company uses its productive capacity.

Manufacturing Overhead

All indirect costs related to the production process, such as utilities for the factory, depreciation of manufacturing equipment, and salaries of the manufacturing personnel.

Variance

Variance is a statistical measure that represents the dispersion or spread of a set of values, specifically showing how much the values differ from the mean of the set.