Stafford Company Prepared a Static Budget for a Production and Sales

question 96

Multiple Choice

Stafford Company prepared a static budget for a production and sales volume of 10,000 units. What is net income if 9,000 units are sold?

• A) $152,100
• B) $152,400
• C) $137,300
• D) $122,400

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Definitions:

Bowed Outward

Refers to the shape of a production possibility frontier that indicates increasing opportunity costs for producing two goods.

Opportunity Cost

The cost of foregone alternatives; the value of the best alternative given up when a decision is made to choose one option over another.

Production Possibilities Frontier

A curve depicting all maximum output possibilities for two goods, given a set of inputs, representing the trade-off between different choices in the allocation of resources.

Opportunity Cost

Giving up possible gains from several options by choosing a particular one.