Capital Is a Factor of Production

question 81

Multiple Choice

Capital is a factor of production. Which of the following is an example of capital?
i. $1,000 in money
ii. 100 shares of Microsoft stock
iii. $10,000 in bonds issued by General Motors
iv. A drill press in your local engineering firm

• A) i and ii
• B) ii only
• C) iii only
• D) iv only
• E) ii and iii

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Definitions:

Manufacturing Overhead

All manufacturing costs that are not directly related to the production of a product, including expenses such as rent, utilities, and salaries for managers.

Direct Labor Cost

The cost that can be directly attributed to the production of specific goods or services, such as wages of employees directly involved in production.

Predetermined Manufacturing Overhead

An estimated rate used to assign manufacturing overhead costs to cost objects during a specific period, calculated before the period begins.

Direct Labor-hour

A measure of the total time workers or employees spend creating a product, which is used in calculating the labor cost involved in production.