The Following Questions Refer to the Table Below

question 8

Multiple Choice

The Following Questions Refer to the table below. The cost of each police officer is $20,000; the cost of each patrol car is $10,000.
-If the total budget is $100,000,what is the most efficient allocation of the crime prevention budget?

• A)1 police officer; 8 patrol cars
• B)2 police officers; 6 patrol cars
• C)3 police officers; 4 patrol cars
• D)4 police officers; 2 patrol cars
• E)5 police officers; 0 patrol cars

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Definitions:

Unit Product Cost

The total cost, including materials, labor, and overhead, to produce a single unit of a product.

Activity-Based Costing

Activity-based costing is a method of assigning indirect costs to products and services based on the activities they require.

Predetermined Overhead Rate

A calculated rate used to allocate manufacturing overhead costs to products based on a certain activity base like labor hours or machine hours.

Traditional Costing

A costing method that allocates overhead based on a predetermined rate, often leading to less accuracy in product costing.