Final answer:
The average fixed cost curve is a downward-sloping curve that decreases as the quantity of output increases. Spreading the overhead is the act of distributing fixed costs over a larger quantity of output.
Step-by-step explanation:
The average fixed cost curve is a downward-sloping curve that starts high and gradually decreases as the quantity of output increases. At low levels of production, the average fixed cost is high because it is divided by a small quantity of output. However, as more units are produced, the fixed cost is spread out over a larger quantity, causing the average fixed cost to decrease.
Spreading the overhead refers to the act of distributing the fixed costs over a larger quantity of output. This is done by increasing production and reducing the average fixed cost per unit. By spreading the overhead, businesses can lower their average fixed costs and potentially increase their profitability.
The complete question is:the total overhead applied to product e1 under activity-based costing is closest to: (round your intermediate calculations to 2 decimal places.)