Table 42 -Refer to Table 4

question 30

Multiple Choice

Table 4.2
$\begin{array}{|l|c|}\hline \begin{array}{c}\text { The Lethbridge }\\\text { Kid's Cowboy } \\\text { Hats }\end{array} & \begin{array}{c}\text { Marginal Cost } \\\text { (dollars) }\end{array} \\\hline \text { Ist hat } & \$ 24 \\\hline \text { 2nd hat } & 30 \\\hline \text { 3rd hat } & 38 \\\hline \text { 4th hat } & 46\\\hline\end{array}$
-Refer to Table 4.2.The table above lists the marginal cost of cowboy hats by The Lethbridge Kid, a firm that specializes in producing western wear.If the price of cowboy hats increases from $38 to $46

• A)consumers will buy no cowboy hats.
• B)the marginal cost of producing the third cowboy hat will increase to $46.
• C)producer surplus will rise from $22 to $46.
• D)producer surplus will rise from $38 to $46.

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Definitions:

Predetermined Overhead Rate

A rate calculated before the accounting period begins, used to allocate manufacturing overhead to individual units of production based on estimated costs.

Machine Hours

The total hours that a machine or group of machines operates during a specific period, often used as a basis for allocating manufacturing overhead.

Direct Labour

Compensation for employees who engage specifically in the creation of a company's products, an essential component of production costs.

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products or job orders, based on a predetermined formula.