A company's total costs are calculated by
A)subtracting total fixed costs from total variable costs.
B)subtracting total variable costs from total fixed costs.
C)subtracting total fixed costs and total variable costs from sales.
D)adding total fixed costs to total variable costs.

Question

Quizplus · Accepted Answer

Total costs are calculated by adding total fixed costs to total variable costs. This is because fixed costs remain constant regardless of the level of production, while variable costs increase or decrease in relation to the level of production. Therefore, to calculate the total costs for a given level of production, we need to add the fixed costs to the variable costs that are incurred at that level of production.

A Company's Total Costs Are Calculated by