Table 34-2 Using the Data from Table 34-2, Suppose

question 46

Multiple Choice

Table 34-2 Using the data from Table 34-2, suppose England transfers 2 units of labor from wine to cloth and Portugal transfers 1 unit from cloth to wine. The combined production of wine and cloth will be increased by

• A) 16 wine, 8 cloth.
• B) 16 wine, 16 cloth.
• C) 12 wine, 12 cloth.
• D) 8 wine, 16 cloth.

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Definitions:

Variable Product Cost

Costs that vary directly with the volume of production, such as raw materials and direct labor costs.

Operating Income

The profitability from a company's core business operations, excluding deductions of interest and taxes.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance.

Direct Labor Rate

The cost per labor-hour of the workers directly involved in the manufacturing or production process.