Suppose Chris Is a Potter Who Makes Mugs When Chris Produces 5 Mugs Per Day, His Average Variable

question 44

Multiple Choice

Suppose Chris is a potter who makes mugs. His total costs depend on the number of mugs he makes each day, as shown in the table below. $$\begin{array} { | c | c | } \hline \begin{array} { c } \text { Number of } \\\text { Mugs Per Day }\end{array} & \begin{array} { c } \text { Total Cost } \\\text { Per Day }\end{array} \\\hline 0 & \$ 10 \\\hline 1 & \$ 14 \\\hline 2 & \$ 19 \\\hline 3 & \$ 25 \\\hline 4 & \$ 32 \\\hline 5 & \$ 40 \\\hline 6 & \$ 49 \\\hline\end{array}$$ When Chris produces 5 mugs per day, his average variable cost is ______.

• A)$6
• B)$8
• C)$30
• D)$40

---

Definitions:

Management By Exception

A management strategy where only significant deviations from planned results are brought to the attention of management, focusing efforts on areas that are not performing as expected.

Standard Costs

Preset costs established for the manufacture of a product, including direct materials, direct labor, and overhead expenses, against which actual costs are compared.

Fixed Overhead Cost Variance

The difference between the budgeted fixed overhead costs and the actual fixed overhead incurred.

Variance Analysis

The process of examining differences between actual and budgeted/expected financial performance and investigating the causes.