COST ACCOUNTING
BREAK EVEN POINT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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total
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fixed
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variable
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average
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Detailed explanation-1: -Average Cost equals the per-unit cost of production which is calculated by dividing the total cost by the total output. Total cost means the sum of all costs, including the fixed and variable costs. Therefore, Average Cost is also often called the total cost per unit or the average total cost.
Detailed explanation-2: -Average cost per unit of production is equal to total cost of production divided by the number of units produced. It is also known as the unit cost.
Detailed explanation-3: -We can calculate the average total cost by dividing the total costs by the number of units produced.
Detailed explanation-4: -Labor usage is denoted L and the per unit cost, or wage rate, is denoted w, so the variable cost is Lw. Consequently, total cost is fixed cost (FC) plus variable cost (VC), or TC = FC + VC = Kr+Lw.