Kelly Is an Architect,and She Is Trying to Decide Whether

question 161

Multiple Choice

Kelly is an architect,and she is trying to decide whether to hire Lawrence,a draftsman,to assist with her work.Kelly could hire Lawrence at $20 per hour,but it would take him three times as long to complete a task as it takes Kelly.Kelly is able to earn $90 per hour and has more architectural jobs than she is able to handle.Which of the following is true?

• A) Kelly should not hire Lawrence because it would be faster for her to do the work herself.
• B) Kelly should do the drafting work herself because she has the lower opportunity cost.
• C) Lawrence should be hired at the $20 per hour wage rate.
• D) Lawrence should be hired,but only if he is paid more than $30 per hour.
• E) Kelly should hire someone who earns minimum wage instead of Lawrence.

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Definitions:

Income Statement

A financial statement that shows a company's revenue and expenses over a specific period, usually resulting in a net profit or loss.

Retained Earnings

The portion of net earnings not distributed to shareholders as dividends but retained by the company to be reinvested in its core business or to pay debt.

Accounts Payable

Money owed by a company to its creditors or suppliers for goods and services that have been received but not yet paid for.

Debit Entry

An accounting entry that increases an asset or expense account, or decreases a liability, equity, or revenue account.