Scenario 17.1 the Data in the Table Tell Us That Both the Both

question 60

Multiple Choice

Scenario 17.1
The data in the table tell us that both the United States and Mexico produce wheat and beef. The United States can make 6 bushels of wheat or 1 pound of beef in a day. Mexico can make 2 bushels of wheat or 4 pounds of beef in a day.

-In the table in Scenario 17.1, what is the opportunity cost of 1 bushel of wheat in Mexico?

• A) 1 pound of beef
• B) 1/2 pound of beef
• C) 1/6 pound of beef
• D) 2 pounds of beef
• E) 6 pounds of beef

---

Definitions:

Variable Costing

An accounting method which only includes variable costs (direct materials, direct labor, and variable manufacturing overhead) in product costs.

Unit Product Cost

The cost assigned to a single unit of a product, incorporating all relevant expenses involved in its production.

Gross Margin

The difference between revenue and cost of goods sold, which indicates how much the company earns from its core business activities before overhead costs.

Absorption Costing

A bookkeeping approach that incorporates all production costs, including both fixed and variable expenses, into the pricing of a product.