Jane Decides to Spend Four Hours Working Overtime Rather Than

question 388

Multiple Choice

Jane decides to spend four hours working overtime rather than going to a family gathering. She earns $12.50 per hour for overtime work. Her opportunity cost of working is

• A)the $50 she earns working.
• B)the $50 minus the enjoyment she would have received from going to the family gathering.
• C)the enjoyment she would have received had she gone to the family gathering
• D)nothing, since she wanted to work more than she wanted to attend the family gathering

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Definitions:

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to products based on a predefined formula, typically involving estimated costs and activity levels.

Machine-Hours

A measure of the hours a machine is operated in the production process, often used as a basis for allocating overhead costs.

Unused Capacity

The portion of a business's potential production that is not being used; it represents the difference between what a company can produce and what it is currently producing.

Income Statement

A financial report that outlines a company's revenues and expenses over a specific period, showing the net profit or loss.