If Average Variable Costs Increase as Output Increases,then

question 82

Multiple Choice

If average variable costs increase as output increases,then

• A) total fixed cost must be increasing also.
• B) marginal cost must be greater than average variable cost.
• C) total cost must be constant.
• D) output must be zero.
• E) average total cost must be increasing also.

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Definitions:

Direct Labor Hours

The total number of hours worked directly on a product or service by employees, usually used to allocate manufacturing costs.

Price Variances

Differences between actual and expected or standard costs that are attributed to changes in the price of goods or services.

Quantity Variances

The difference between actual and standard quantities used in production, affecting cost management and budgeting.

Rate Variance

The difference between the actual rate paid for something and the standard or expected rate.