A Package Delivery Service Currently Has 12 Vans and 16

question 88

Multiple Choice

A package delivery service currently has 12 vans and 16 employees. Vans cost $400 per week and employees earn $300 per week. The last van added 480 packages delivered to total output, while the last employee added 450 packages. The firm

• A) is making the correct decision because the dollar expenditure ($4800) is equal for vans and employees.
• B) should use more vans and fewer employees because the last van added 480 packages while the last employee only added 450 packages.
• C) should use fewer vans and more employees because the last dollar spent on vans yielded 1.2 additional packages delivered, while the last dollar spent on employees yielded 1.5 packages delivered.
• D) could deliver more packages for the same budget by using fewer vans and more employees.
• E) both c and d

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Definitions:

Job-Order Costing

Job-order costing tracks production costs individually for each job or project, making it suitable for customized orders or differentiated products.

Process Costing

An accounting method used to accumulate costs in standardized, continuous production processes, assigning average costs to identical product units.

Industry

The sector of an economy concerned with the production and distribution of goods and services within a specific field or area.

Job-Order Costing

An accounting system used to assign manufacturing costs to individual products or batches, making it possible to track the cost of specific jobs or orders.