Figure 14-5
Suppose a firm operating in a competitive market has the following cost curves: 
-Refer to Figure 14-5. Firms would be encouraged to enter this market for all prices that exceed
Definitions:
Overhead Applied
The allocation of indirect costs, such as manufacturing overhead, to specific jobs or products based on a predetermined rate or method.
Activity-Based Costing
A cost allocation system that first identifies overhead expenses, assigns them to specific activities, and then distributes these costs to various products.
Traditional Costing Method
An accounting method that assigns indirect costs to products based on a predetermined overhead rate, often not reflecting the actual consumption of resources by each product.
Direct Labor-Hours
The total number of hours worked directly on the production of goods.
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