Question

Factory Overhead Controllable Variance Alvarado Company produced 15,200 units of product that required 5 standard direct labor hours per unit. The standard variable overhead cost per unit is $1.00 per direct labor hour. The actuak variable factocy overhead was $52,110. This information has been coliected in the Microsoft Excel Online fle. Open the spreadsheet, perform the required analysis, and input your answers in the question

Answer 1

Average variable cost is calculated by dividing variable cost by quantity of output. The average variable cost curve is U-shaped and always lies below the average total cost curve.

Step-by-step explanation:

To calculate the average variable cost, you divide the variable cost by the quantity of output. For example, if the variable cost of producing 80 haircuts is $400, then the average variable cost is $400/80, which is $5 per haircut. The average variable cost curve is typically U-shaped. The average variable cost curve always lies below the average total cost curve because the latter includes both variable and fixed costs. As output increases, fixed costs become relatively less important, causing the average variable cost to approach the average cost.