The Costs of Materials Consumed in Producing Good Units in the Production

question 73

Multiple Choice

The costs of materials consumed in producing good units in the Production Department of Jacobs Company were $38,000 and $39,125 for June and July, respectively. The number of equivalent units produced in June and July was 4,000 and 4,250, respectively. Which of the following best describes the change in the cost of materials between the two months?

• A)The cost of materials decreased by $0.29 per unit, indicating an improvement.
• B)The cost of materials increased by $1,125, indicating an unfavorable change.
• C)The cost of materials increased by $0.28 per unit, indicating an unfavorable change
• D)The cost of materials increased by $0.88 per unit, indicating an unfavorable change.

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Definitions:

Without Government

A scenario that describes a situation or theoretical condition where governmental institutions and interventions do not exist or are absent.

Pollution

The contamination of air, water, or soil by substances that are harmful to living organisms.

Pigouvian Tax

A tax imposed on any market activity that generates negative externalities, intended to correct the market outcome by internalizing the costs of the externality.

Marginal Social Cost

The complete expense incurred by society to produce an extra unit of a good or service, encompassing both individual costs and external impacts.