Recall the Application About Jasper Johns and House Painting to Answer

question 125

Multiple Choice

Recall the Application about Jasper Johns and house painting to answer the following question(s) . In this
Application, it is assumed that Johns can earn $5,000 per day by painting works of art, and therefore
should hire a housepainter who charges $150 per day, and takes 10 days, to paint his house.
-Based on the Application, Jasper Johnsʹ daily earnings are 33.33 times more than the houspainterʹs daily earnings. If Jasper Johnsʹ earnings per day were only twice as much as the housepainterʹs earnings, what should he do?

• A)He should still hire the housepainter to paint his house.
• B)He should paint his house himself.
• C)He should hire a less productive housepainter.
• D)He should remain indifferent as to who paints the house, for the difference in daily earnings would now be much less significant.

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Definitions:

Contribution Margin

The amount by which sales revenue exceeds variable costs, indicating how much revenue contributes towards covering fixed costs and generating profit.

Outside Supplier

A third-party company or entity that provides products or services to another company, often used when in-house production or provision is not feasible.

Relevant Cost

Costs that will be affected by a decision in the future and therefore should be considered in the decision-making process.

Direct Labor Cost

Expenses associated with the wages and benefits of employees who are directly involved in the manufacturing process.