In cost accounting, how is average total cost calculated for a manufacturing enterprise?
Answer and explanation
Correct answer: D. Total production cost divided by total quantity produced
- Step 1: Average total cost is the total cost of production divided by the total number of units produced: . Answer: Total production cost divided by total quantity produced. Why not the others: Total revenue minus variable cost is contribution margin, marginal cost multiplied by hours is meaningless, and fixed cost minus depreciation does not yield unit cost.
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