Refer to the Information Provided in Figure 20

question 44

Multiple Choice

Refer to the information provided in Figure 20.5 below to answer the question(s) that follow. Figure 20.5
-Refer to Figure 20.5. The domestic price of oil is $130 per barrel. If the world price of oil is $120 per barrel, this country will

• A) import 19 million barrels.
• B) import 14 million barrels.
• C) export 5 million barrels.
• D) export 19 million barrels.

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Definitions:

Variable Overhead

The indirect expenses that fluctuate with the level of production activity, such as utilities for the manufacturing plant.

Overhead Absorption Rate

Budgeted overhead divided by budgeted volume. Also called overhead application rate.

Direct Labor Hours

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

Standard Volume

The amount of volume the plant would have generated if each unit of product manufactured used precisely the standard unit of volume allowed.