Final answer:
The Flexible Budget report shows how fixed and variable costs relate to cost objects and adjust with changes in activity levels. Key measures included in the report are Average Total Cost, Average Variable Cost, and Marginal Cost, each analyzing costs on a per-unit basis.
Step-by-step explanation:
The report being referred to in the question is the Flexible Budget report. The Flexible Budget report shows how costs are assigned to cost objects and how these costs would change with changes in activity levels. Costs are categorized into fixed and variable costs, allowing businesses to see how changes in production volume affect costs on a per-unit basis. Three essential concepts included in this report are Average Total Cost, Average Variable Cost, and Marginal Cost. These measures help businesses understand the cost implications per unit produced and are integral in strategic decision-making.
Average Total Cost (ATC) is calculated by dividing the total costs by the number of units produced. Average Variable Cost (AVC) is found by dividing the total variable costs by the number of units produced. Lastly, Marginal Cost (MC) refers to the additional cost of producing one more unit of a product. These key figures are often visualized in graphs to show their relationship with different levels of production output.