If the USCan Produce Pizza for $5 Each and Barrels of Beer

question 11

Multiple Choice

If the U.S.can produce pizza for $5 each and barrels of beer for $25 each,and Germany can produce pizza for $7 each and barrels of beer for $21 each,then

• A) Germany has a comparative advantage in the production of beer.
• B) Germany has an absolute advantage in the production of beer.
• C) Germany has a comparative advantage in the production of pizza.
• D) Germany has a comparative advantage in the production of beer and pizza.

Understand the consolidation process under the equity method and initial value method.

Identify correct accounting treatments for consolidation adjustments.

Comprehend the treatment of goodwill in consolidation and how goodwill impairment works.

Calculate consolidated net income including understanding the impact of subsidiary earnings and amortizations.

---

Definitions:

Predetermined Overhead Rate

A rate calculated at the beginning of the fiscal period to estimate indirect costs based on a certain activity, such as machine hours or labor hours.

Direct Labor-Hours

The cumulative amount of time spent working directly in the production of a good or the delivery of a service.

Job-Order Costing

A cost accounting system that accumulates costs per job rather than process, suitable for firms producing unique or custom products.

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products, calculated before the manufacturing process begins.