On a Diagram of a Production Possibilities Boundary, the Concept

question 11

Multiple Choice

On a diagram of a production possibilities boundary, the concept of opportunity cost is illustrated by the

• A)distance from the origin to the boundary.
• B)unattainable points outside the boundary.
• C)negative slope of the boundary.
• D)area bounded by the two axes and the boundary.
• E)boundary being concave to the origin.

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Definitions:

Volume Variance

A measure of the difference between the budgeted and actual volume of production, affecting costs or profitability.

Manufacturing Overhead

All manufacturing costs that are not direct labor or direct materials, such as utilities, depreciation, and maintenance of equipment.

Direct Labor-Hours

The total hours worked by employees directly involved in the manufacturing process.

Standard Cost System

An accounting method that uses cost estimates to predict the cost of producing or acquiring goods.