According to the Table Below,what Is the Average Variable Cost

question 26

Multiple Choice

According to the table below,what is the average variable cost of producing 50 units of output?
$$\begin{array} { | l | l | l |} \hline \mathbf { Q } & \mathbf { F C } & \mathbf { V C } \\\hline 0 & 1,000 & 0 \\\hline 20 & 1,000 & 350 \\\hline 50 & 1,000 & 700 \\\hline 90 & 1,000 & 1,050 \\\hline 125 & 1,000 & 1,400 \\\hline 145 & 1,000 & 1,750 \\\hline 160 & 1,000 & 2,100 \\\hline\end{array}$$

• A) 21
• B) 34
• C) 14
• D) 20

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Definitions:

Fixed Manufacturing Overhead

These are the manufacturing costs that do not vary with the volume of production, including costs like rent, insurance, and salaries for certain employees.

Machine-Hours

The total hours that machinery is operational and in use on the production floor.

Variable Manufacturing Overhead

Costs that vary with production output levels, such as utilities and indirect materials, associated with manufacturing.

Machine-Hours

A measure of the amount of time a machine is operated, used in manufacturing to allocate overhead costs to products.