Table 2-12 Table 2-12 Shows the Number of Labor Hours

question 318

Multiple Choice

Table 2-12
Table 2-12 shows the number of labor hours required to produce a canoe and a sailboat in Guatemala and Honduras.
-Refer to Table 2-12. If the two countries specialize and trade, who should export sailboats?

• A) There is no basis for trade between the two countries.
• B) Guatemala
• C) Honduras
• D) They should both be importing sailboats.

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Definitions:

Variable Costing

An accounting method that includes only variable production costs (costs that change with the level of output) in the cost of manufactured goods.

Absorption Costing

Absorption costing is a method of inventory costing that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.

Absorption Costing

An accounting method that includes all manufacturing costs — direct materials, direct labor, and both variable and fixed manufacturing overhead — in the cost of a product.

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