Table 3-4 Assume That the Farmer and the Rancher Can Switch Between

question 88

Multiple Choice

Table 3-4
Assume that the farmer and the rancher can switch between producing meat and producing potatoes at a constant rate.

-Refer to Table 3-4.The opportunity cost of 1 pound of potatoes for the rancher is

• A) 1/2 pound of meat.
• B) 1/2 hour of labor.
• C) 2 pounds of meat.
• D) 8 hours of labor.

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Definitions:

Product Costs

Product costs are the costs directly associated with the manufacturing of goods, including materials, labor, and overhead.

Period Costs

These are costs that are not directly tied to production and are expensed in the period they are incurred, such as selling, general, and administrative expenses.

Factory Overhead

All indirect costs associated with manufacturing, such as indirect labor, maintenance, and utilities, not directly tied to a specific product.

Direct Labor Hours

The total number of work hours spent by employees who directly manufacture or produce goods.