Suppose That Each Worker Must Use Only One Shovel to Dig

question 102

Multiple Choice

Suppose that each worker must use only one shovel to dig a trench,and shovels are useless by themselves.In the long run,the firm's cost function is

• A) TC = (w/r) ∗ q.
• B) TC = (w + r)/q.
• C) TC = (w + r).
• D) TC = (w + r) ∗ q.

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Definitions:

Fixed Component

A cost that does not change with the increase or decrease in the amount of goods or services produced or sold.

Predetermined Overhead Rate

An established rate used to apply manufacturing overhead costs to products, calculated in advance based on expected costs and activity levels.

Labor-Hour

A measure of work effort quantified in hours, commonly used to allocate costs or measure productivity in various contexts.

Fixed Overhead Volume Variance

A financial metric indicating the difference between the budgeted and actual volume of production, multiplied by the fixed overhead rate per unit.