-Refer to Figure 8

question 13

Multiple Choice

-Refer to Figure 8.6,which shows just three of a firm's various possible short-run average cost curves.Suppose the firm is currently producing 160 units at and average cost of $90 per unit.Which of the following statements is true?

• A) The firm could reduce its average cost by employing more capital
• B) The firm could reduce its average cost by employing less capital
• C) The firm is producing its output at the lowest possible long-run average cost
• D) The firm would increase its average cost if it used more capital

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Definitions:

Manufacturing Cost Variance

The difference between the actual costs of production and the standard or expected costs, indicating efficiency or inefficiency in the manufacturing process.

Direct Materials Cost Variance

The difference between the actual cost of direct materials used in production and the standard cost expected to be used.

Direct Labor Cost Variance

The difference between the budgeted cost of direct labor and the actual cost incurred.

Cost Variance

The difference between the expected (budgeted) cost and the actual cost incurred.