The Table Above Presents the Production Possibilities of Farmer Brown

question 328

Essay

The table above presents the production possibilities of Farmer Brown. Use these data to calculate Farmer Brownʹs opportunity cost of additional beef as Farmer Brown moves from point A to B to C to D. Also use the data to calculate Farmer Brownʹs opportunity cost of additional wheat as Farmer Brown moves from point D to C to B to A. Based on these costs, does Farmer Brown use resources that are more productive in one activity than the other? Explain your answer. $$\begin{array} { | l | l | l | l | } \hline \begin{array} { l } \text { Production } \\\text { point }\end{array} & \begin{array} { l } \text { Fish } \\\text { (pounds) }\end{array} && \begin{array} { l } \text { Berries } \\\text { (pounds) }\end{array} \\\hline A & 0 & \text { and } & 50 \\\hline B & 1 & \text { and } & 45 \\\hline C & 2 & \text { and } & 35 \\\hline D & 3 & \text { and } & 20 \\\hline E & 4 & \text { and } & 0 \\\hline\end{array}$$

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Definitions:

Cost Reconciliation

The process of verifying and adjusting the cost of a production process or manufacturing order to reflect actual costs incurred.

Work in Process Inventory

The value of all unfinished goods currently in production, including materials, labor, and overhead costs up to the point of calculation.

Units Transferred Out

A rephrased definition is: The quantity of products that have completed a particular stage of the production process and are moved to the next stage or finished goods inventory.

Weighted-Average Method

An accounting technique used to calculate the cost of goods sold and ending inventory cost by averaging the costs of all goods available for sale.