Suppose You Are Considering Going to the Cinema, and You

question 24

Multiple Choice

Suppose you are considering going to the cinema, and you place a r₁80 value on your anticipated enjoyment of the film.The ticket price is R90 and you would be giving up two hours of work, where you earn R75 per hour.You would go to

• A)work as the opportunity cost of the movies exceeds the expected benefit.
• B)see the film as your incentive is the R90 excess expected benefit.
• C)see the film as your enjoyment will exceed the lost wages by R30.
• D)see the film as the benefit of R270 exceeds the lost wages.

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Definitions:

Cost System

A method for accumulating and allocating costs to products or services.

Direct Materials

Raw materials directly used in the manufacture of a product and can be easily traced to the finished product.

Variances

Differences between planned or expected financial performance and the actual outcome.

Kilos

A kilo or kilogram is a metric unit of mass equal to 1000 grams, used worldwide for measuring weight.