Use the Following to Answer Questions

question 181

Multiple Choice

Use the following to answer questions:
-(Table: Lunch) Look at the figure Lunch. Joe makes and sells picnic lunches to people taking all-day rafting trips on the river. The marginal cost and average cost of each lunch are a constant $4. If Joe is one of many firms in a competitive industry, how many lunches will he produce in the long run?

• A) 0
• B) 20
• C) 40
• D) 60

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Definitions:

Labor-Hour

A measure of work accomplished, recorded, or billed based on the number of hours worked.

Activity-Based Costing

A method of allocating overhead and indirect costs to products or services based on the activities that drive those costs.

Cost Of Serving

The total expenses incurred while delivering a service or product to a customer.

Direct Labor Cost

The expense related to the wages of workers directly involved in the production of goods or services.