-Refer to Exhibit 2-8

question 6

Multiple Choice

-Refer to Exhibit 2-8.If Maria and Maya each specialize in the good in which she has a comparative advantage and then engage in trade,____________________ can consume a combination of goods that lies beyond her PPF.

• A) Maria,but not Maya,
• B) Maya,but not Maria,
• C) both Maria and Maya
• D) neither Maria nor Maya

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Definitions:

Predetermined Overhead Rate

This is a rate used to allocate manufacturing overhead costs to individual units of production, based on a certain activity, such as labor hours or machine hours.

Direct Materials

Substances that can be directly linked to the manufacturing of a particular item.

Direct Labor

Labor costs that can be easily traced to individual units of product; essentially the wages paid to workers who directly manufacture goods.

Manufacturing Overhead

All indirect manufacturing costs, including but not limited to utilities, rent, and salaries of supervisors.