Suppose an American Worker Can Make 20 Pairs of Shoes

question 80

Multiple Choice

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 20 apples per day. Canada's opportunity cost of producing a pair of shoes is _____ than the United States, so Canada should specialize in _____ production.

• A) higher; shoe
• B) lower; apple
• C) higher; apple
• D) lower; shoe

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Definitions:

Standard Costs

Predetermined costs for materials, labor, and overhead used as a benchmark to measure actual performance against.

Management

The process of planning, organizing, leading, and controlling an organization's resources to achieve its goals.

Stockholders

Stockholders, or shareholders, are individuals or entities that legally own one or more shares of stock in a joint-stock company, making them partial owners of that company.

Variable Factory Overhead Controllable Variance

The difference between actual variable overhead and the standard cost of variable overhead that management could control or influence.