Average Fixed Costs

question 1

Multiple Choice

Average fixed costs:

• A) increase as the quantity produced increases.
• B) decline for a while as output increases and then begin to rise again.
• C) decrease steadily as output increases.
• D) are less than average variable costs at all output levels.
• E) None of these alternatives is correct.

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Definitions:

Deferred Tax Assets

Financial assets that reduce future tax liability due to temporary differences between the ledger and tax basis of assets and liabilities, or the carryover of unused tax credits/deductions.

Income Tax Expense

The cost to a company for its taxable income, comprising current tax liabilities and deferred tax movements.

Service Revenue

Income earned from the provision of services to customers or clients.

Deferred Tax Asset

An accounting term representing taxes paid or carried forward but not yet recognized in the income statement.