A Firm Obeys the Least-Cost Rule for Factors X and Y

question 179

Multiple Choice

A firm obeys the least-cost rule for factors X and Y by equating

• A)MRPx to MRPy.
• B)MPPx/Px to MPPy/Py.
• C)Px/MPPx to Py/MPPy.
• D)MFCx to MFCy.

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Definitions:

Normal Balance

The side (debit or credit) of an account that is expected to have a higher balance, indicating the side which increases the account.

Allowance Method

A financial method that estimates the value of debts unlikely to be collected by determining uncollectible accounts each period's end.

Allowance for Doubtful Accounts

A contra asset account that represents the estimated proportion of accounts receivable that may not be collectable.

Direct Write-off Method

An accounting approach where uncollectible accounts receivable are directly written off against income at the time they are deemed unrecoverable.