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The total cost at 5 units of output is $ 30. The fixed cost is $ 5. The average variable cost at 5 units of output is:?

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Question ajoutée par Mohammed Asim Nehal , M Asim Nehal & Co , Chartered Accountants
Date de publication: 2015/07/30
Michael Lagunday
par Michael Lagunday , Accounts Assistant , Invest Group Overseas LLC

My answer is C. $5.

Variable cost is the cost of input which varies according to the level production. Fixed cost on the other hand is the cost which do not vary according to the level of production.

The computation for the average variable cost would be:

Total Cost – Fixed Cost = Variable Cost

$30 - $5 = $25 [variable cost]

 

Therefore, average variable cost is $5 ($25/5)

Tahir Nawaz
par Tahir Nawaz , Operations Manager , Askari Bank

30-5=25/5=5 is a correct answer

Utilisateur supprimé
par Utilisateur supprimé

c ) $5>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

$5, total var cost is25 if we divide it with the no of units average will be $5

Saidul Alam
par Saidul Alam , Accountant , Akhtar Al Balushi Trad. & Cont. L.L.C

The correct answer is c) $5.

 

Utilisateur supprimé
par Utilisateur supprimé

c) $5

Total Cost (TC) = Fixed Cost (FC) + Variable Cost (VC)

$30 = $5 + VC

VC = $30 - $5

VC = $25 thus total variable cost

Therefore average variable cost at5 units = total variable cost divided by number of units 

=$25/5 = $5

Joseph Bukenya
par Joseph Bukenya , Accountant , Uganda NCD Alliance

TC-FC = VC

30-5 =25

 

25/5 =5

 

C.5

Vinod Jetley
par Vinod Jetley , Assistant General Manager , State Bank of India

c) $5 is the average variable cost per unit at5 units of production.

Ali Mohammed
par Ali Mohammed , Lecturer in Accounting, Finance, Maths and Economics , Admas University College

Since the total cost is $30 and fixed cost is $5. Using the Total cost concept= Fixed cost + Variable cost.... $30= $5 + Variable cost.... than variable cost at5 units must be $25.... So option A $25.... if the question had asked variable cost per unit.... than25/5= $5 variable cost per unit... hence total cost=5+5(5)= $30.... However the question asks for average variable cost at5 units of output than must be option A $25. Correct me if i am wrong  

Gayasuddin Mohammed
par Gayasuddin Mohammed , Advocate , Practicing Law before High Court at Hyderabad

The average variable cost at5 units of output is: (d) $1

diff in cost i.e  (30 - (5 *5)) /5  =1 $.

Nehal Sir, correct me If I understood the question wrongly. Thanks.

Ahmer Zamir
par Ahmer Zamir , Consultant , Saleem Associates & Co

The variable cost of at5 units output is $1

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