Question

Select the correct answer from each drop-down menu.

Identify the type of costs to complete the sentence.

The 1.)_____ cost is the sum of fixed and variable costs. 2.)_____ cost is the sum of fixed and variable cost, divided by production volume.

1.)Answer choices: semi variable, total, average

2.)Answer choices: marginal, average, target

Answer 1

1. Total cost

2. Average cost

Step-by-step explanation:

1. A total cost refers to the sum of fixed cost which is the cost that do not vary with the level of output such as rent, salaries and variable cost which is a cost that varies with the level of output such as raw materials, labour etc.

When goods are produced, costs are usually expended on such production. The actual cost expended on such output is called total cost.

2. Average cost is the addition of fixed and variable cost divided by production output.

One of the factors that influence average cost is the production period. It means that increasing production in the short period might not be feasible for producers hence check the average cost both in the short run and long run inorder to decide the production best suited for each period.