COST ACCOUNTING
FINANCIAL TERMINOLOGY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Total costs/output
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Total variable costs/output
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Output/total costs
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Output/total variable costs
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Detailed explanation-1: -The formula for total variable cost is: Total Variable Cost = (Total Quantity of Output) x (Variable Cost Per Unit of Output) Cost of materials, utilities, and commissions are all examples of variable costs.
Detailed explanation-2: -The general form of the cost function formula is C(x)=F+V(x) C ( x ) = F + V ( x ) where F is the total fixed costs, V is the variable cost, x is the number of units, and C(x) is the total production cost.
Detailed explanation-3: -Average total cost is total cost divided by the quantity of output. Marginal cost is the amount by which total cost would rise if output were increased by one unit. When analyzing firm behavior, it is often useful to graph average total cost and marginal cost.
Detailed explanation-4: -The total variable cost is simply the quantity of output multiplied by the variable cost per unit of output: Total Variable Cost = Total Quantity of Output X Variable Cost Per Unit of Output. The variable cost per unit will vary across profits.