The following information is given regarding driving lessons provided by Arrive Alive Company over several spans of time: $$\begin{array} { | l | r | r | r | }
\hline & { \text { Length of Time } } \
\hline & \text { TODAY } & \text { ONE YEAR } & \text { FIVE YEARS } \
\hline \text { Total cost of lessons } & \$ 600 & \$ 110,000 & \$ 508,000 \
\hline \text { Number of lessons } & 50 & 10,000 & 55,000 \
\hline
\end{array}$$ Select the incorrect statement from the following.
A) The average cost per lesson over the five-year period was $9.24.
B) Based on the most current information, the cost per lesson was $12.00.
C) The average cost based on the total five-year period is probably the most appropriate cost for pricing purposes.
D) The selection of the most appropriate time span for calculating the average cost often requires considerable judgment.

Question

The following information is given regarding driving lessons provided by Arrive Alive Company over several spans of time: $$\begin{array} { | l | r | r | r | } 
\hline & { \text { Length of Time } } \
\hline & \text { TODAY } & \text { ONE YEAR } & \text { FIVE YEARS } \
\hline \text { Total cost of lessons } & \$ 600 & \$ 110,000 & \$ 508,000 \
\hline \text { Number of lessons } & 50 & 10,000 & 55,000 \
\hline
\end{array}$$ Select the incorrect statement from the following.
A) The average cost per lesson over the five-year period was $9.24.
B) Based on the most current information, the cost per lesson was $12.00.
C) The average cost based on the total five-year period is probably the most appropriate cost for pricing purposes.
D) The selection of the most appropriate time span for calculating the average cost often requires considerable judgment.

Quizplus · Accepted Answer

The average cost based on the total five-year period is not the most appropriate cost for pricing purposes because it includes the costs of lessons that were given in the past. The most appropriate cost for pricing purposes is the cost of lessons that are currently being given.

The Following Information Is Given Regarding Driving Lessons Provided by Arrive