Exhibit 20-6 ​

question 172

Multiple Choice

Exhibit 20-6
​

-Refer to Exhibit 20-6. I₁, I₂ and I₃ are indifference curves and line ab is the relevant budget constraint. Point N is

• A)the consumer's equilibrium position.
• B)unattainable.
• C)inferior to every other labeled point on the diagram.
• D)attainable, but does not exhaust the consumer's income.

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Definitions:

Predetermined Overhead Rate

The predetermined overhead rate is calculated by dividing estimated overhead costs by an allocation base, such as direct labor hours, to allocate overhead costs to products or services.

Manufacturing Overhead

All indirect costs related to the production process, such as the costs of maintenance, supplies, and utilities, excluding direct materials and direct labor.

Direct Labor-Hour

A measure of labor productivity that indicates the amount of labor input in terms of hours for producing one unit of output.

Job-Order Costing

A cost accounting system in which costs are assigned to specific jobs or batches, used in industries where goods or services are produced upon request.