Joaquim Has New Babies at Home, So He Cares Only

question 71

Multiple Choice

Joaquim has new babies at home, so he cares only about diapers and wipes. Joaquim's preferences are represented by U(D,W) = DW, where D is the number of diapers and W is the number of wipes that Joaquim purchases. Joaquim's preferences can also be represented by this utility function:

• A) U(D,W) = D^0.5W^0.5
• B) U(D,W) = D^0.5 + W^0.5
• C) U(D,W) = D + W
• D) U(D,W) = 0.5D + 0.5W

---

Definitions:

Underapplied

A situation where the applied manufacturing overhead is less than the actual manufacturing overhead incurred, indicating that the costs have not been fully allocated.

Predetermined Overhead Rate

A rate calculated before the accounting period begins, used to allocate overhead costs to products or job orders based on a chosen activity base.

Direct Labor-Hours

The total hours worked by employees directly involved in the production of goods or provision of services.

Manufacturing Overhead

Any production expenses beyond direct labor and materials, which include overheads like equipment wear and tear, utilities, and rental fees.