-The Table Above Gives Production Information for Bob's Baseball Cap

question 429

Multiple Choice

-The table above gives production information for Bob's Baseball Cap Company. Bob's total cost when zero caps are produced is $200 and workers cost $10 per hour. The marginal cost per hat of producing 30 hats per hour (instead of 25) is

• A) $240.00 per hat.
• B) $250.00 per hat.
• C) $8.33 per hat.
• D) $2.00 per hat.

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Definitions:

Split-Off Point

The split-off point is the stage in a manufacturing process where joint products can be recognized as separate products, each with its own identity.

Joint Products

Joint products refer to two or more products that are generated from a common set of inputs or production processes, where no single product can be identified as the main product until a certain point in the production process.

Fixed Cost

A cost that remains constant, in total, regardless of changes in the level of activity within the relevant range. If a fixed cost is expressed on a per unit basis, it varies inversely with the level of activity.

Special Order

A one-time customer order, often at a negotiated price, that is outside the company's standard range of products or services.