Table 2-7 Table 2-7 Shows the Output Per Month of Two People

question 188

Multiple Choice

Table 2-7

Table 2-7 shows the output per month of two people, Fred and Barney. They can either devote their time to making pogo sticks or making unicycles.
-Refer to Table 2-7.What is Barney's opportunity cost of making a unicycle?

• A)1/2 of a pogo stick
• B)2 pogo sticks
• C)1.75 unicycles
• D)2.8 pogo sticks

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Definitions:

Manufacturing Overhead

All indirect costs associated with manufacturing beyond direct materials and direct labor, such as factory rent, utilities, and equipment depreciation.

Cost-Driver Identification

The process of determining the activities or factors that directly cause a cost to increase or decrease, important for accurate cost allocation.

Cause-And-Effect Relationship

The principle that an action (cause) results in a certain response or outcome (effect), often used in scientific and social studies.

Cost Pools

Groupings of individual costs typically according to function or department, allowing for more effective overhead cost allocation.