John Has Three Options for Summer Work

question 2

Multiple Choice

John has three options for summer work.He can do lawn work for $100 per week, babysit for $125 per week, or work at the local pool for $175 per week.All of the options would require approximately 20 hours of work per week.In addition, if he chooses to work at the pool, he will incur $20 in gas costs per week.The opportunity cost if he chooses to babysit is:

• A)$100
• B)$175
• C)$155
• D)$105

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Definitions:

Cost of Goods Manufactured

The total cost of materials, labor, and overhead incurred for products completed during a specific time period.

Factory Overhead

The total of all indirect costs associated with manufacturing, such as indirect labor, maintenance, and utilities that cannot be directly traced to a specific product.

Indirect Labor

Labor costs for employees who assist in the production process but are not directly involved in the creation of the final product, such as supervisors and maintenance workers.

Indirect Materials

Supplies used in the production process that cannot be directly traced to specific products, such as lubricants for machinery.