The Diagram Below Shows Two Production Possibilities Boundaries for Country

question 30

Multiple Choice

The diagram below shows two production possibilities boundaries for Country X. FIGURE 1- 3
-Refer to Figure 1- 3. If Country X were producing at point C,

• A) it is not possible to move to any point on PPB1 or PPB2 without technological progress.
• B) this is the maximum output possible from given resources.
• C) the opportunity cost of moving to point A is to give up some capital goods.
• D) the opportunity cost of moving to point B is to give up some consumption goods.
• E) the opportunity cost of moving to point A is zero.

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Definitions:

Variable Overhead Rate Variance

The difference between the actual variable overhead rate incurred and the standard rate, multiplied by the actual activity level.

Standard Cost

The predetermined cost of manufacturing a single unit or a number of units during a specific period under normal conditions.

Raw Materials Quantity Variance

The difference between the actual quantity of raw materials used and the expected quantity of raw materials based on the standard cost, which indicates efficiency in using materials.

Standard Cost System

An accounting system that uses standard costs for product costs, serving as a tool for planning, controlling, and decision making.