Given That C = $500 + 0

question 4

Multiple Choice

Given that C = $500 + 0.8Y_D,if the level of disposable income is $1,000,the level of saving is

• A)$300.
• B)-$300.
• C)$500.
• D)-$1,300.

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Definitions:

Variable Overhead

Costs that change in proportion to the activity or volume of production, such as utilities or indirect materials.

Direct Material

The raw materials directly used in the manufacturing of a product, which are easily traceable to the finished product.

Direct Labor-Hours

Direct labor-hours are the total time workers spend creating a product or providing a service, directly correlated to the volume of production.

Variable Overhead

Indirect production costs that vary with the level of output, such as utilities or indirect materials used in the production process.