Given the Following Information About the Cost Function for Bob's

question 43

Multiple Choice

Given the following information about the cost function for Bob's Beautiful Bowling Balls: $\begin{array}{c}\begin{array}{lc}\text { Out put } &\text { Total } \\&\text { Fixed } \\&\text { Costs }\\1 & 10 \\2 & \\3 & \\4 & \\5 & \\6 & \\7 & \\8 & \end{array}\begin{array}{c}\text { Total }&\text { Total } \\\text { Variable }&\text { Costs } \\ \text { Costs } &\\60 & \\& 100 \\& 120 \\& 128 \\& 180 \\& 252 \\& 316 \\& 436 \end{array}\begin{array}{cccc}\text { Average } & \text { Average } & \text { Average } & \text { IMargina } \\\text { Fixed } & \text { Variable } & \text { Total } & \text { Cost } \\\text { Cost } & \text { Cost } & \text { Cost } & \\\\\\\\\\\\\\\\\\\end{array}\end{array}$
Which of the following is true?

• A)The average fixed cost of producing 3 units is $200.
• B)The total cost of producing 5 units is $230.
• C)The marginal cost of the 4^th unit is lower than for any other unit.
• D)AVC falls through the first five units of output.
• E)None of the above is true.

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Definitions:

Factory Utilities

Expenses incurred for electricity, gas, water, and sewage services used in the operation of a manufacturing plant or factory.

Plantwide Overhead Rate

A single rate used to allocate manufacturing overhead costs to all units produced, regardless of the department in which they were made.

Labor Intensive

A process or industry that requires a large amount of labor to produce its goods or services, as opposed to being heavily automated.

Mechanized Work

Work processes that are performed using machinery and equipment to enhance efficiency and productivity.