Pairing Company Has the Following Cost Drivers Identified as a Through

question 76

Essay

Pairing Company has the following cost drivers identified as A through F for determining product manufacturing overhead costs.
(A) Number of pieces of equipment
(B) Number of direct material purchase orders
(C) Number of production runs
(D) Square feet of warehouse space
(E) Number of machine hours
(F) Square feet of factory space
For each of the following activity cost pools, choose the letter of the most appropriate cost driver for each cost pool.

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Definitions:

Marginal Revenue Product

This is the additional revenue generated by employing one more unit of a factor, such as labor or capital.

Marginal Productivity Theory

An economic theory proposing that input costs, such as wages, are determined by the additional output produced by the last unit of input used.

Resource Markets

Economic markets where the inputs for the production process (e.g., labor, land, capital) are bought and sold, determining factor prices based on supply and demand.

Income Distribution

How a nation’s total GDP is distributed amongst its population.