A User Cost of Zero Implies That

question 134

Multiple Choice

A user cost of zero implies that

• A) a firm will extract all of a resource in the present.
• B) a firm will extract resources at a faster rate than if the user cost was positive.
• C) a firm will extract resources at a faster rate than if the user cost was negative.
• D) the price of the resource will not change.

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Definitions:

Job-order Costing

A cost accounting system that accumulates manufacturing costs separately for each job.

Direct Labour Cost

The wages and benefits paid to employees who are directly involved in the production of goods or services.

Manufacturing Overhead Applied

The portion of estimated manufacturing overhead costs that is assigned to each unit of production, based on a predetermined rate.

Job-order Costing

An accounting method that tracks costs individually for each job, rather than within set periods.