As Output Increases, Average Cost Decreases Continually Because

question 81

Multiple Choice

As output increases, average cost decreases continually because

• A) average variable cost per unit is increasing.
• B) average fixed cost per unit is decreasing.
• C) total variable cost is increasing.
• D) total variable cost is decreasing.
• E) total fixed cost is reducing.

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Definitions:

Operating Expenses

Costs associated with a company's main operational activities, excluding the cost of goods sold.

Merchandising Companies

Companies that buy and sell goods without fundamentally changing their condition; they are involved in retail or wholesale.

Merchandising Company

A business that purchases finished goods for resale, earning revenue from the difference between the retail and wholesale prices.

Sales Revenue Section

The sales revenue section of an income statement details the income generated from sales of goods or services before any costs or expenses are deducted.