If Fixed Costs Are $10,000 and Variable Costs Are Constant

question 25

Multiple Choice

If fixed costs are $10,000 and variable costs are constant at $1.00 per unit over the relevant range of output,what will the average total cost be when 10,000 units are produced?

• A)$0.20
• B)$2.00
• C)$5.00
• D)$1.00

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Definitions:

Incremental Value

The additional value created by a new investment or project, compared to the scenario without it.

Equity-Financed

A method of raising capital whereby a company issues new shares of stock and receives fresh capital in return but does not incur debt.

Value Per Share

The amount of money that would be received for each share of stock if all of a company’s assets were sold at their exact book value.

Incremental Value

The additional value created by undertaking a particular action, project, or investment, compared to not doing so.