Suppose a Firm Increases the Quantity of Labour Employed from 5

question 63

Multiple Choice

Suppose a firm increases the quantity of labour employed from 5 to 6 workers,and as a result,the firm's total output increases from 100 units to 400 units.The marginal product of the sixth worker is

• A)50 units.
• B)100 units.
• C)200 units.
• D)300 units.
• E)66.67 units.

Understand the application of differential analysis in various managerial decisions including product discontinuation and asset replacement.

Evaluate make-or-buy decisions in the context of manufacturing processes.

Grasp the influence of production bottlenecks on pricing strategies and product prioritization.

Comprehend various product pricing methods including cost-plus and variable cost approaches.

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Definitions:

Fixed Overhead Volume Variance

Fixed overhead volume variance is the difference between the budgeted and actual volume of production, multiplied by the fixed overhead rate, indicating efficiency in production volume.

Predetermined Fixed Overhead Rate

A rate used to allocate fixed overhead costs to produced goods, based on estimated costs and activity levels.

Denominator Activity

The level of activity used to allocate fixed costs in a costing system.

Standard Machine-Hours

A metric used to estimate the amount of machine time required for or used during production based on standard rates.