Table 11-5 A Small Island Off the Coast of Cape Cod Contains

question 389

Multiple Choice

Table 11-5
A small island off the coast of Cape Cod contains two restaurants and two retail stores. Tourists need to take a ferry boat to reach the island, but with a recent slowdown in the economy, tourists are less willing to pay for the boat ride to visit the island. The owners of the restaurants and stores on the island - Restaurants 1 and 2, and Stores A and B - think that if tourists could ride the ferry for free, they would be happy to visit the island, eat and shop. The business owners are considering contributing to a pool of money that will be used to pay for roundtrip ferry service each day. The table represents their willingness to pay, that is, the maximum amount that each business owner is willing to contribute, per day, to pay for each ferry trip.
-Refer to Table 11-5. Suppose the cost to run the ferry for each roundtrip is $750 per day and the 4 business owners have agreed to split the costs of the ferry trips equally. Which business owner(s) would be opposed to having any ferry trips?

• A)only the owner of Store B
• B)only the owners of Stores A and B
• C)only the owners of Stores A and B and Restaurant 2
• D)All 4 business owners would be opposed to paying for any ferry trips.

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Definitions:

Indirect Materials

Materials used in the production process that cannot be directly linked to a specific product, such as lubricants for machinery.

Managerial Accounting

The method of pinpointing, quantifying, examining, and conveying fiscal data to management to achieve a company's objectives.

Objective Measures

Quantitative assessments that are based on observable data and are not influenced by personal feelings or opinions.

Subjective Estimates

Judgments or opinions used in decision-making or accounting that are based on personal feelings or beliefs rather than on precise measurement.