Graph 3-1 These Figures Illustrate the Production Possibilities Frontiers for Robinson Crusoe

question 85

Multiple Choice

Graph 3-1

These figures illustrate the production possibilities frontiers for Robinson Crusoe and Friday with 12 hours of labour.
-Refer to Graph 3-1.For Robinson Crusoe, the opportunity cost of 1 kg of fish is:

• A)2 kg of coconuts
• B)1/2 kg of coconuts
• C)4 kg of coconuts
• D)1/4 kg of coconuts

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Definitions:

Conversion Costs

The combined costs of direct labor and manufacturing overhead used to convert raw materials into finished products.

FIFO Method

A method of inventory valuation that assumes the first items placed in inventory are the first sold, hence, the cost of the oldest inventory is used to determine the cost of goods sold.

Process Costing

A costing method used where similar products are produced continuously, allocating production costs based on the process or department.

Conversion Cost

The total cost of transforming raw materials into finished goods, including labor and manufacturing overhead.