The Table Given Below Shows the Number of Labor Hours

question 46

Multiple Choice

The table given below shows the number of labor hours required to produce 1 umbrella and 1 bushel of corn in the U.K. and the Rest of the World. If the U.K. and the Rest of the World begin to trade with each other, the international price of umbrellas will lie between _____ and _____. $$\begin{array} { | c | c | c | } \hline \text { Labor hours to make: } & \text { In the Urited Kingdorn } & \text { In the Rest of the World } \\\hline \text { l umbrella } & 3.00 & 2.00 \\\hline \text { 1 bushel of corn} & 1.00 & 0.25 \\\hline\end{array}$$

• A)1/3 of a bushel of corn per umbrella; 3 bushels of corn per umbrella
• B)3 bushels of corn per umbrella; 8 bushels of corn per umbrella
• C)1/8 of a bushel of corn per umbrella; 1/3 of a bushel of corn per umbrella
• D)1/8 of a bushel of corn per umbrella; 8 bushels of corn per umbrella

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Definitions:

Weighted-Average Method

An inventory valuation method that averages the cost of all similar goods available during a period to determine the cost of goods sold and ending inventory value.

Conversion Costs

Expenses related to turning raw materials into complete goods, usually encompassing direct workforce costs and manufacturing overhead expenses.

Processing Department

A section within a manufacturing facility where raw materials are converted into finished products through a series of operations or processes.

Ending Inventory

The total value of goods available for sale at the end of an accounting period, calculated by adding purchases to beginning inventory and subtracting cost of goods sold.