Bill Can Cook Dinner in 45 Minutes and Mow the Lawn

question 24

Multiple Choice

Bill can cook dinner in 45 minutes and mow the lawn in 1.5 hours.Eileen can cook dinner in 1.5 hours and mow the lawn in 2 hours.Bill's opportunity cost of mowing the lawn is

• A) 1/2 of a dinner
• B) 2 dinners
• C) 3/4 of a dinner
• D) 1-1/3 dinners
• E) 2-2/3 dinners

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Definitions:

Variable Overhead Rate

The rate at which variable overhead costs are allocated to products, based on an activity such as labor hours or machine hours.

Direct Labor-Hours

The total hours worked by employees directly involved in the manufacturing process.

Fixed Manufacturing Overhead

The costs associated with manufacturing that do not vary with the level of production output, including rent of the facility and salaries of the staff.

Variable Selling

Costs that vary directly with the level of sales activity, such as commissions or shipping charges.