Use the following to answer questions:
-(Table: Costs of Birthday Cakes) Look at the table Costs of Birthday Cakes. Assume that fixed costs are $10. What is the average variable cost of 4 cakes?
A) $38.00
B) $10.00
C) $9.50
D) $8.00

Question

Use the following to answer questions: 
-(Table: Costs of Birthday Cakes) Look at the table Costs of Birthday Cakes. Assume that fixed costs are $10. What is the average variable cost of 4 cakes?
A) $38.00 
B) $10.00 
C) $9.50 
D) $8.00

Quizplus · Accepted Answer

The average variable cost is the total variable cost divided by the number of units produced. In this case, the total variable cost is $38 (4 x $9.50), and the number of units produced is 4. Therefore, the average variable cost is $38 / 4 = $9.50.

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