Table 3-3 Assume That Zimbabwe and Portugal Can Switch Between Producing Toothbrushes

question 322

Multiple Choice

Table 3-3
Assume that Zimbabwe and Portugal can switch between producing toothbrushes and producing hairbrushes at a constant rate.

-Refer to Table 3-3.Zimbabwe's opportunity cost of one hairbrush is

• A) 3/10 toothbrush and Portugal's opportunity cost of one hairbrush is 5/6 toothbrush.
• B) 3/10 toothbrush and Portugal's opportunity cost of one hairbrush is 6/5 toothbrushes.
• C) 10/3 toothbrushes and Portugal's opportunity cost of one hairbrush is 5/6 toothbrush.
• D) 10/3 toothbrushes and Portugal's opportunity cost of one hairbrush is 6/5 toothbrushes.

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Definitions:

Activity-Based Costing

A pricing strategy that attributes overhead and indirect expenses to associated goods and services by determining cost drivers.

Traditional Costing Method

An accounting approach that assigns manufacturing overhead costs to products based on volume-related measures such as direct labor hours or machine hours.

Activity-Based Costing

An accounting methodology that assigns costs to products or services based on the activities that go into producing them, aiming for more accurate allocation of overhead costs.

Traditional Costing Method

A method of accounting that assigns costs to products based on an average overhead rate. It tends to allocate indirect costs based on a single, volume-based cost driver.