Firm a Has a Higher Labor Cost-Total Cost Ratio Than

question 88

Multiple Choice

Firm A has a higher labor cost-total cost ratio than Firm B. If both firms employ the same type of labor, and the wage rate rises by $1, then Firm A's product price will most likely ____________ than Firm B's product price.

• A)rise by more
• B)fall by more
• C)fall by less
• D)rise by less

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Definitions:

Budgeted Cash Disbursements

An estimate of all cash payments that a business plans to make over a specific period, including operating expenses, purchase of assets, and other payouts.

Variable Selling Expense

includes costs that vary directly with sales volume, such as commissions, shipping charges, and promotional expenses.

Direct Labor Wage Rate

The amount paid per hour or per unit of production to employees who directly manufacture or assemble products.

Raw Materials Cost

The total expense associated with the raw materials used in the production of goods or services.