Question

Costs incurred each time a company generates a set quantity of goods produced at one time are called _________level costs.

Answer 1

Batch-level costs are costs incurred for a set quantity of goods produced at one time, part of fixed costs, unaffected by production levels. A company experiences economies of scale when larger production volumes lead to lower average costs per unit.

Step-by-step explanation:

Costs incurred each time a company generates a set quantity of goods produced at one time are called batch-level costs. These are part of a broader category of costs termed fixed costs. Fixed costs are expenditures that a firm must make before production starts and that do not change regardless of the production level. They are distinct from variable costs, which vary with production volume.

Economies of scale occur when the larger scale of production leads to lower average costs. For example, a small factory might produce 1,000 units at an average cost of $12 per unit, while a larger factory might produce 5,000 units at a cost of $4 per unit. This demonstrates that as the quantity of production increases, economies of scale enable a firm to spread out its fixed costs over a larger number of units, thereby reducing the cost per unit.

Answer 2

Costs incurred each time a company generates a set quantity of goods produced at one time are called batch-level costs.

Step-by-step explanation:

In a business environment, when a company determines the least costly production technology, they aim for the optimal scale of production, taking into consideration the economies of scale. Costs incurred each time a company generates a set quantity of goods produced at one time are called batch-level costs. Economies of scale refer to the cost advantage that arises with increased output of a product: as the quantity of output goes up, the cost per unit goes down, which is evident in larger factories producing goods at a lower average cost than smaller factories.