Use the Following to Answer Questions: Table: Oil Pumps -(Table: Oil Pumps) Refer to the Table

question 146

Multiple Choice

Use the following to answer questions: Table: Oil Pumps $$\begin{array} { c c c c } \hline { \text { Oil Pump One } } && { \text { Oil Pump Two } } \\\begin{array} { c } \text { Quantity } \\\text { (Barrels of Oil) }\end{array} & \begin{array} { c } \text { Marginal } \\\text { Cost }\end{array} & \begin{array} { c } \text { Quantity } \\\text { (Barrels of Oil) }\end{array} & \begin{array} { c } \text { Marginal } \\\text { Cost }\end{array} \\\hline 1 & 5 & 1 & 10 \\2 & 10 & 2 & 12 \\3 & 15 & 3 & 14 \\4 & 20 & 4 & 16 \\5 & 25 & 5 & 18 \\6 & 30 & 6 & 20 \\7 & 35 & 7 & 22 \\\hline\end{array}$$
-(Table: Oil Pumps) Refer to the table. Suppose that we want to produce seven barrels of oil. To minimize costs, we should produce:

• A) all seven barrels of oil from Oil Pump Two.
• B) three barrels of oil from Oil Pump One and four barrels of oil from Oil Pump Two.
• C) one barrel of oil from Oil Pump One and six barrels of oil from Oil Pump Two.
• D) all seven barrels of oil from Oil Pump One.

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Definitions:

Direct Labor

The wages and related expenses for employees who are directly involved in the production of goods or services.

Overhead Cost

Rephrased: Expenditures related to the business's general operations, not directly linked to any specific product or service.

Direct Materials

Raw materials that are directly used in the production of a product and can be easily attributed to that product.

Direct Labor

The cost of workers who can be directly traced to the production of products.