In the Above Figure,what Is the AVERAGE Variable Cost of Producing

question 15

Multiple Choice

In the above figure,what is the AVERAGE variable cost of producing 5 units of output?

• A)$12
• B)$20
• C)$40
• D)$60
• E)$80

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Definitions:

Variable Manufacturing Overhead

Costs in manufacturing that vary with operational output, such as indirect materials, utilities, and other expenses that increase with production volume.

Fixed Manufacturing Overhead

Regular, consistent costs associated with operating a manufacturing facility that do not vary with the level of production, such as salaries and rent.

Contribution Margin

The amount by which a product's selling price exceeds its total variable costs, contributing to covering fixed costs and generating profit.

Production Constraint

A limitation or bottleneck in a manufacturing process that affects the overall output.