A Rental Cost of $20,000 Plus

question 66

True/False

A rental cost of $20,000 plus $.70 per machine hour of use is an example of a mixed cost.

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Definitions:

Total Cost

The sum of all expenses, variable and fixed, incurred in producing goods or services.

Average Fixed Cost

The total fixed costs of production divided by the quantity of output produced, typically decreasing as production scale increases.

Average Variable Cost

The total variable costs (costs that change with output level) divided by the quantity of output produced.

AVC

Average Variable Cost; the cost of variable inputs divided by the quantity of output produced.