Suppose the World Economy Is Composed of Just Two Countries

question 231

Multiple Choice

Suppose the world economy is composed of just two countries: Italy and Greece. Each can produce steel or chemicals, but at different levels of economic efficiency. The production possibilities curves
For the two countries are shown in the graphs. The assumption made about the domestic production
Opportunity costs in both countries is that they are

• A) constant.
• B) variable.
• C) increasing.
• D) decreasing.

Classify types of service organizations (e.g., car hire companies, auto repairers).

Identify characteristics of service organizations including intangible outputs, inventory levels, and labour costs.

Differentiate between various costing methods applicable to service entities (job costing, process costing, activity-based costing).

Understand the role of costs in service pricing, service promotion, and cost control.

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Definitions:

Single-Base Allocation

A cost allocation method where overhead costs are distributed based on a single criterion or cost driver.

Cost Difference

The variance between the actual cost and the standard or expected cost of an item or activity.

ABC System

Activity-Based Costing System, a method of assigning overhead and indirect costs to specific products and services based on their consumption of resources.

Cost Pools

Groupings of individual costs based on their similarity or a shared function, used in activity-based costing to allocate costs more accurately.