Suppose That Nadine in Problem 1 Has a Production Function

question 26

Multiple Choice

Suppose that Nadine in Problem 1 has a production function 3x₁ + x₂. If the factor prices are $3 for factor 1 and $3 for factor 2, how much will it cost her to produce 80 units of output?

• A) $960
• B) $80
• C) $240
• D) $600
• E) $160

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Definitions:

Product Costing

The method used to determine the expenses associated with producing a product, considering factors like raw materials, labor, and overhead costs.

Factory Overhead

Indirect costs related to manufacturing, including costs associated with operating the factory like utilities and salaries, but excluding direct materials and direct labor.

Indirect Materials

Materials used in the production process that cannot be directly linked to specific products or jobs, such as lubricants for machinery.

Materials Requisitions

Requests or orders for company materials to be used in production, indicating types, amounts, and intended use.