Final answer:
The manufacturing overhead cost applied to jobs refers to the allocation of fixed costs, such as labor at $10 per hour, to the production of individual units. The average fixed cost curve would decline as production volume increases, demonstrating the concept of 'spreading the overhead' and economies of scale.
Step-by-step explanation:
The manufacturing overhead cost applied to jobs is essentially how the fixed costs of production, commonly known as overhead, are allocated to individual units of output. When the fixed cost of $1,000 is divided by the quantity of output produced, the result is the average fixed cost (AFC). If we were to graph this, the average fixed cost curve would appear as a hyperbola, declining as output increases.
"Spreading the overhead" refers to the process of allocating the total fixed costs over a larger number of units as production increases. This results in a decrease in the AFC per unit. For example, if widget workers are paid $10 per hour for labor, and this cost is fixed, as more widgets are produced, the cost of labor per widget decreases. This is representative of the concept of economies of scale where spreading fixed costs over a greater volume of output reduces the cost per unit.