Recall the Application About the Attempt to Form a Salt

question 95

Multiple Choice

Recall the Application about the attempt to form a salt cartel in the 19th century to answer the following question(s) .
-Recall the Application.Why did the salt cartel fail to get established,even though it paid new firms not to produce salt for a year?

• A) Individual firms cheated on the cartel by selling outside the cartel.
• B) The artificially high price also caused new firms to enter the market.
• C) Salt consumers found substitutes and brought the price of salt down.
• D) Both A and B are correct.

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Definitions:

Factory Overhead

all indirect costs associated with the manufacturing process, excluding direct labor and direct materials.

Machine Hours

A measure of production time or activity based on the number of hours machines are used in the manufacturing process.

Overapplied Overhead

A situation where the actual manufacturing overhead costs are less than the overhead costs applied to production, resulting in a variance.

Factory Overhead

All indirect costs associated with manufacturing a product, including the costs of running the factory but excluding direct materials and direct labor.