Antonio and Elyse Are Two Woodworkers Who Both Make Kitchen

question 91

Multiple Choice

Antonio and Elyse are two woodworkers who both make kitchen cabinets and bathroom vanities. In one month, Antonio can make 12 kitchen cabinets or 36 bathroom vanities, where Elyse can make 10 kitchen cabinets or 50 bathroom vanities. What is the opportunity cost of 1 kitchen cabinet?

• A) 1/5 bathroom vanity for Antonio and 1/3 bathroom vanity for Elyse
• B) 5 bathroom vanities for Antonio and 3 bathroom vanities for Elyse
• C) 1/3 bathroom vanity for Antonio and 1/5 bathroom vanity for Elyse
• D) 3 bathroom vanities for Antonio and 5 bathroom vanities for Elyse

---

Definitions:

Long-term Lease Obligation

A financial commitment that involves leasing an asset for a long-term period, noted on the balance sheet as a liability.

Capital Lease

A Capital Lease is a lease agreement that has the characteristics of a purchase agreement for accounting purposes.

Present Value

The current value of a future amount of money or stream of cash flows given a specified rate of return.

Executory Costs

Refers to the costs related to executing a lease that are neither initially capitalized nor recognized in the income statement immediately, typically involving future operating expenses under a lease agreement.