Table 13-5
the Following Table Shows the Production and Costs

question 143

Multiple Choice

Table 13-5
The following table shows the production and costs for the Wooden Chair Factory.
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$$\begin{array} { | c | c | c | c | c | c | c | } \hline \begin{array} { c } \text { Labor } \\\text { (Number of } \\\text { workers) }\end{array} & \begin{array} { c } \text { Capital } \\\text { (Number of } \\\text { machines) }\end{array} & \begin{array} { c } \text { Output } \\\text { (Chairs } \\\text { produced per } \\\text { hour) }\end{array} & \begin{array} { c } \text { Marginal } \\\text { Product of } \\\text { Labor } \\\text { (Chairs } \\\text { produced per } \\\text { hour) }\end{array} & \begin{array} { c } \text { Cost of } \\\text { Workers } \\\text { (Dollars) }\end{array} & \begin{array} { c } \text { Cost of } \\\text { Machines } \\\text { (Dollars }\end{array} & \begin{array} { c } \text { Total } \\\text { Cost } \\\text { (Dollars) }\end{array} \\\hline 1 & 2 & 5 & & & & \\\hline 2 & 2 & 10 & & & & \\\hline 3 & 2 & 20 & & & & \\\hline 4 & 2 & 35 & & & & \\\hline 5 & 2 & 55 & & & & \\\hline 6 & 2 & 70 & & & & \\\hline 7 & 2 & 80 & & & & \\\hline\end{array}$$ ​
-Refer to Table 13-5. Assume the Wooden Chair Factory currently employs 5 workers. What is the marginal product of labor when the factory adds a 6th worker?

• A)5 chairs per hour
• B)15 chairs per hour
• C)25 chairs per hour
• D)70 chairs per hour

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Definitions:

Departmental Overhead Rates

The allocation of indirect costs to specific departments based on relevant cost drivers, aiding in more accurate product costing and pricing decisions.

Finishing Department

The finishing department is the final stage in the manufacturing process where goods receive their final touches or coatings before being sold.

Machine Hour

A unit of measurement that indicates the amount of time a machine is operated, used in allocating manufacturing costs related to machinery use.

Activity-Based Costing

A costing method that assigns overhead and indirect costs to related products and services based on their consumption of resources, aiming to provide more accurate product costing.