Which statement best describes theoretical costs?

The statement that best describes theoretical costs refers to the idea of what the computer thinks, which aligns with the concept of theoretical costs in financial modeling and budgeting. Theoretical costs are estimates or projections based on assumptions and data inputs used in various models. They do not represent real transactions but rather hypothetical scenarios of what costs could be, based on the parameters set within the computation system.

In financial contexts, theoretical costs are often used for planning purposes, helping organizations understand potential expenses and how various factors might affect their costs under different circumstances. These projections can aid in budgeting and decision-making, allowing businesses to explore scenarios without being limited to recorded actual spendings or historical data.

The other options relate to concrete financial figures or specific accounting records, which do not encompass the theoretical aspect necessary for this understanding. The average costs over the fiscal year, total expenses incurred each month, and actual spendings recorded in the budget all represent tangible costs that have occurred rather than theoretical estimates. Thus, the correct option aptly captures the nature of theoretical costs as they are understood in budgeting practices.