Answer the Question on the Basis of the Following Output

question 181

Multiple Choice

Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed. $\begin{array} { |c | c| } \hline \text { Nuriber of Warkers } & \text { Units of Output } \\\hline 0 & 0 \\\hline 1 & 40 \\\hline 2 & 90 \\\hline 3 & 126 \\\hline 4 & 150 \\\hline 5 & 165 \\\hline 6 & 180 \\\hline\end{array}$ Diminishing marginal returns become evident with the addition of the

• A) sixth worker.
• B) fourth worker.
• C) third worker.
• D) second worker.

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Definitions:

Direct Labour Hours

The total hours worked by employees directly involved in the manufacturing process or providing a service.

Standard Overhead Rate

The rate at which indirect costs are allocated to products or services based on a pre-determined basis, such as labor hours or machine hours.

Direct Labour Hour

A measure of the amount of time workers spend on a specific task, directly involved in the production of goods or services.

Standard Costing System

A cost accounting system that estimates the cost of products in advance, based on standard inputs of materials, labor, and overhead.