The Rule for the Optimal Use of Any Input States

question 131

Multiple Choice

The rule for the optimal use of any input states that

• A) when MRP is less than price, profit will increase when more of that resource is utilized.
• B) when MRP is greater than resource price, profit will increase when more of that resource is utilized.
• C) when MRP equals price, profit will increase when less of that resource is utilized.
• D) when MRP is greater than resource price, profit will increase when less of that resource is utilized.
• E) resources should be used only if MRP exceeds product price.

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Definitions:

Recoverable Amount

The higher value between an asset's fair value minus costs of disposal and its value in use.

Carrying Amount

The amount at which an asset or liability is recognized on the balance sheet after deducting any accumulated depreciation, amortization, or impairment.

Fair Value

An estimate of the price at which an asset or liability would be traded between knowledgeable, willing parties in an arm's length transaction.

Costs To Sell

The direct costs attributable to the disposition of an asset, excluding finance costs and income taxes.