If Laborers Become More Efficient Over Time, and If the Ajax

question 313

Multiple Choice

If laborers become more efficient over time, and if the Ajax Company would want to expand production, they would

• A) substitute capital for labor.
• B) hire more laborers.
• C) hire fewer laborers.
• D) produce less product.

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Definitions:

Machine-Hours

A measure of production output or activity based on the number of hours machinery is operated.

Job-Order Costing System

A methodology that assigns manufacturing costs to each individual product, allowing companies to track expenses for unique production orders.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to products or job orders, based on a particular activity base such as labor hours or machine hours.

Machine-Hours

A measure of production time, calculated as the total hours that machines are operating in the manufacturing process.