If the Likelihood of a Future Event Is Probable and the Amount

question 188

Essay

If the likelihood of a future event is probable and the amount of the expense cannot be estimated,how should the company report the contingency?

---

Definitions:

Average Fixed Cost

The fixed costs of production (expenses that do not change with the level of output) divided by the quantity of output produced.

Output

The total quantity of goods and services produced by an economy or a firm.

Average Total Cost

The total cost of production (fixed plus variable costs) divided by the quantity of output produced, a measure of per unit cost.

Marginal Cost

The cost of producing one additional unit of a good or service, which can vary depending on the level of production.