Use the Following to Answer Questions -(Table: Costs of Birthday Cakes)Use Table: Costs of Birthday Cakes

question 153

Multiple Choice

Use the following to answer questions : $$\begin{array}{l}\text { Table: Costs of Birthday Cakes }\\\begin{array} { c c } \hline \text { Quantity of cakes } & \text { Variable cost, } \boldsymbol { V C } \\\hline 0 & 0 \\1 & 15 \\2 & 25 \\3 & 30 \\4 & 38 \\5 & 50 \\6 & 70 \\\hline\end{array}\end{array}$$
-(Table: Costs of Birthday Cakes) Use Table: Costs of Birthday Cakes.Assume that fixed costs are $10.What is the average fixed cost of four cakes?

• A) $48.00
• B) $10.00
• C) $5.00
• D) $2.50

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Definitions:

First-In, First-Out

A rephrased definition: An inventory management strategy that assumes the items stocked first are the first to be sold, used to manage costs and inventory levels.

Inventory Costing

This is a method used to value inventory, including methods like FIFO (First-In, First-Out), LIFO (Last-In, First-Out), and weighted average cost.

Direct Materials

Raw materials that can be directly traced to the production of a specific good or service, considered part of the product's cost.

Process Cost System

A method of accounting used for industries where production is continuous, allocating costs to products based on the processes they go through.