Suppose That a Worker in Country a Can Make Either

question 2

Multiple Choice

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year.Country A has 200 workers.Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year.Country B has 400 workers.The opportunity cost of one tomato in Country A is:

• A) 100 bananas.
• B) 20 bananas.
• C) 5 bananas.
• D) 4 bananas.

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Definitions:

Activity-Based Costing

A costing method that assigns overhead and indirect costs to related products and services based on the actual consumption of resources.

Traditional System

A cost accounting system that allocates overhead based on a single or few measures of activity, such as direct labor hours or machine hours.

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products, calculated before the period begins based on estimated costs and activity levels.

Direct Labor Cost

The expense associated with labor directly involved in the manufacturing of a product.