The Prattle Corporation Makes and Sells Only One Product Called

question 88

Multiple Choice

The Prattle Corporation makes and sells only one product called a Deb.The company is in the process of preparing its Selling and Administrative Expense Budget for next year.The following budget data are available: All of these expenses (except depreciation) are paid in cash in the month they are incurred. If the company has budgeted to sell 17, 000 Debs in January, then the total budgeted variable selling and administrative expenses for January will be:

• A)$34, 000
• B)$39, 100
• C)$18, 700
• D)$25, 500

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Definitions:

Average Variable Cost

Average Variable Cost is calculated by dividing the total variable cost (cost that changes with the amount of output) by the quantity of output produced.

Marginal Cost

An incremental expense associated with manufacturing one extra item of a product.

Average Fixed Cost

The total fixed costs divided by the number of units produced, representing how fixed costs dilute with increased production.

Marginal Cost

Marginal cost is the increase or decrease in the total cost that arises when the quantity produced is incremented by one unit.