The Following Table Shows the Marginal Products of Capital (K)and

question 134

Multiple Choice

The following table shows the marginal products of capital (K) and labour (L) for various methods for Firm ABC to produce 1000 toys per day.
TABLE 8-2
-Refer to Table 8-2.Suppose capital costs $80 per unit and labour costs $24 per unit.Which production method minimizes the cost of producing 1000 toys per day.

• A)method B
• B)method C
• C)method D
• D)method E
• E)method F

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Definitions:

Allowance for Doubtful Accounts

The allowance for doubtful accounts is an accounting technique to estimate the amount of receivables that are expected not to be collected, acting as a contra account to accounts receivable.

Bad Debt Expense

An expense reported on the income statement, representing the estimated amount of credit sales that are not expected to be collected due to customer default.

Uncollectible Receivables

Refers to money owed to a company that it is unable to collect from its debtors, often considered as a bad debt expense.

Allowance Method

An accounting technique used to estimate and account for bad debts, where companies anticipate some accounts receivable will be uncollectible.