Variable Costs

question 166

Multiple Choice

Variable costs

• A) are fixed in total as production levels change.
• B) are fixed per unit and vary in total as productions levels change.
• C) decrease per unit as production volume increases.
• D) vary per unit of output as production levels change.

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Definitions:

Average Variable Cost

The total variable cost divided by the total output, representing the variable cost per unit of output.

Average Total Cost

The total cost per unit produced, determined by dividing the sum of fixed and variable costs by the quantity of output.

Shut Down

The process of ceasing operations or activities, often temporarily, in a business or other organization.

AVC

Average variable cost refers to the total variable cost per unit of output, calculated by dividing the total variable costs by the amount of output produced.