Suppose GDP Consists of Wheat and Rice

question 43

Multiple Choice

Suppose GDP consists of wheat and rice.In 2011, 200 kg of wheat are sold at $4 per kg, and 100 kg of rice are sold at $2 per kg.If in 2012, the base year, the price of wheat was $1 per kg and the price of rice was $2 per kg, then for year 2011:

• A)nominal GDP is $100
• B)nominal GDP is $400
• C)nominal GDP is $4000
• D)nominal GDP is $1000

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Definitions:

Overhead Cost Allocation

The process of spreading out indirect costs (overheads) to different departments or products within a company, aimed at determining true costs of products or services.

Activity-Based Costing

A method of accounting where costs are assigned based on the activities and processes that contribute to the production of a product or service.

Activity Cost Pool

A grouping of all the costs associated with a particular activity, used in activity-based costing.

Cost Allocation Base

A method or factor used to assign costs in an equitable manner to various cost objects like departments, products, or projects.