Table 2.8 Table 2.8 Shows the Number of Labour Hours Required to of Labour

question 176

Multiple Choice

Table 2.8

Table 2.8 shows the number of labour hours required to produce a motorcycle and a guitar in Ireland and Scotland.
-Refer to Table 2.8. If the two countries specialise and trade, who should export motorcycles?

• A)There is no basis for trade between the two countries.
• B)Ireland
• C)Scotland
• D)They should both be importing motorcycles.

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Definitions:

Support Department Cost Allocation

The distribution of overhead costs from auxiliary departments (like maintenance or HR) to producing departments based on relevant allocation bases.

Support Department Cost Allocations

The process of distributing indirect costs from service departments to the departments that directly contribute to revenue generation.

Direct Method

A technique in cost accounting where only direct costs are assigned to cost objects, ignoring indirect costs.

Step-Down Method

A cost allocation method used in accounting to assign overhead costs to products or service departments in a sequential manner.