-Agnes Can Produce Either 1 Unit of X or 1

question 292

Multiple Choice

-Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour.

• A) Brenda has an absolute advantage in the production of X and Y.
• B) Agnes has a comparative advantage in the production of Y.
• C) Brenda has a comparative advantage in the production of X.
• D) Brenda cannot gain from trade.

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Definitions:

Budgeted Fixed Manufacturing Overhead

The predetermined amount of fixed overhead expenses expected to be incurred in the manufacturing process.

Net Operating Income

Profit of a business after all operating expenses, excluding taxes and interest, have been deducted from total revenue.

Standard Cost Variances

The differences between actual costs incurred and the standard costs that were expected or budgeted, used for management control and analysis.

Cost of Goods Sold

Costs directly linked to the creation of goods sold by a business, encompassing materials and labor.