A Manager of a Clothing Firm Is Deciding Whether to Add

question 11

Multiple Choice

A manager of a clothing firm is deciding whether to add another factory in addition to one already in production.The manager would compare

• A)The total benefits gained from the two factories to the total costs of running the two factories.
• B)The incremental benefit expected from the second factory to the total costs of running the two factories.
• C)The incremental benefit expected from the second factory to the cost of the second factory
• D)The total benefits gained from the two factories to the incremental costs of running the two factories.

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Definitions:

Ideal Standard

Ideal standard refers to a benchmark for perfection in manufacturing or service delivery that assumes no inefficiencies or wastage.

Financial Statements

Formal records of the financial activities and position of a business, individual, or other entity.

Standard Costs

Predetermined costs to manufacture a single unit of product, used as a benchmark for measuring the actual costs incurred.

Labor Time

The amount of work time that employees spend on various tasks, often measured to analyze productivity or allocate labor costs.