If the Price of a Resource Is Greater Than Its

question 86

Multiple Choice

If the price of a resource is greater than its marginal revenue product, the firm should

• A)charge a higher price for its product.
• B)make no change in the units of the resource used.
• C)increase the units of the resource used in order to increase profits.
• D)decrease the units of the resource used in order to increase profits.

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Definitions:

Direct Labour-Hours

The total man-hours expended by workers directly involved in the manufacturing process.

Manufacturing Overhead

All indirect costs associated with manufacturing, such as indirect materials, indirect labor, and other factory-related expenses.

Job-Order Costing

A costing method used to determine the costs associated with manufacturing products individually or in batches, tracking the direct materials, direct labor, and manufacturing overhead per job.

Process Costing

It's an accounting methodology utilized in manufacturing where costs are assigned to products based on the processes they go through, often used for homogeneous items.