Use the Following Scenario to Answer the Questions That Follow

question 132

Multiple Choice

Use the following scenario to answer the questions that follow.
An economy has two workers, Smith and Ricardo. Every day they work, Smith can produce 4 computers or 16 smartphones, and Ricardo can produce 6 computers or 12 smartphones.
-What is the opportunity cost for Ricardo to produce one computer?

• A) 1/4 smartphone
• B) 1/2 smartphone
• C) 1 smartphone
• D) 2 smartphones
• E) 4 smartphones

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Definitions:

Overhead Volume Variance

The difference between the budgeted and actual overhead costs, attributable to variations in production volume.

Fixed Overhead Items

Costs that do not change with the level of production or sales over a certain range, such as rent, salaries, and insurance.

Material Price Variances

The difference between the actual cost of materials and the standard cost multiplied by the actual quantity of materials used.

Cost Control

The process of monitoring and managing the expenses of a business to adhere to a budget or increase profitability.