Land and a Building on the Land Are Purchased for $336,000

question 15

Multiple Choice

Land and a building on the land are purchased for $336,000. The appraised values of the land and building are $60,000 and $300,000, respectively. The cost allocated to the building should be

• A) $28,000.
• B) $122,000.
• C) $150,000.
• D) $280,000.

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Definitions:

Average Total Cost

The total cost divided by the quantity of output produced, indicating the average cost per unit of output.

Total Cost

The complete cost of production for a business, including both fixed and variable costs.

Average Total Cost

The total cost of production divided by the number of units produced, representing the cost per unit of goods or services.

Average Total Cost

The sum of all production expenses (both constant and changeable) divided by the total amount of products made.