The Following Table Shows the Relationship Between the Speed of a Computer's

question 119

Multiple Choice

The following table shows the relationship between the speed of a computer's CPU and its benefits and costs. Assume that all other features of the computer are the same (that is, CPU speed is the only source of variation) , and only the CPU speeds listed below are available for purchase. Application of the Cost-Benefit Principle would lead one to purchase a ______ computer.

• A) 2.0GHz
• B) 2.5GHz
• C) 3.0GHz
• D) 4.0GHz

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Definitions:

Variable Costing

This accounting method includes only variable costs - costs that vary with production level - in the calculation of the cost of goods sold.

Unit Product Cost

The total cost associated with creating one unit of product, including materials, labor, and overhead.

Variable Costing

An accounting method where only the variable production costs are allocated to the product, while fixed costs are treated as period costs.

Net Operating Income

The total income from operations of a company before taxes and interest deductions.