A Technological Improvement Lowers the Cost of Producing Coffee

question 109

Multiple Choice

A technological improvement lowers the cost of producing coffee. At the same time, consumers' preferences for coffee increase. The equilibrium price of coffee will

• A) rise.
• B) fall.
• C) remain the same.
• D) rise, fall, or stay the same, depending on the relative size of the shifts in the demand and supply curves.

Analyze the effect of different bases (machine-hours, direct labor-hours) on overhead rate calculation and job costing.

Understand the principles of job-order costing.

Calculate predetermined overhead rates for different departments or activities.

Allocate manufacturing overhead to specific jobs based on relevant activity bases.

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Definitions:

Potential Profits

The anticipated earnings that a business or investment may generate in the future.

Indirect Exporting

A method of entering a foreign market by selling products to an intermediary, who in turn sells the products to foreign customers.

Intellectual Property

Legal rights given to individuals or organizations over creations of the mind, such as inventions, literary and artistic works, designs, and symbols.

Intermediary

An entity or person that acts as a link between different parties in a business transaction.