-Refer to Exhibit 8-4

question 80

Multiple Choice

-Refer to Exhibit 8-4.A movement from point A to point B on SRAS₁ could have been the result of

• A) a decrease in the price level.
• B) an increase in the price level.
• C) an adverse supply shock.
• D) a beneficial supply shock.

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Definitions:

Direct Materials

Raw materials that are directly incorporated into a finished product and can be directly attributed to the product.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to individual products or job orders, calculated before the production period begins based on estimated costs.

Direct Labour Hours

The total hours worked by employees directly involved in the manufacturing process, affecting the overall production cost.

Actual Manufacturing Overhead

The total of all actual indirect costs incurred in the production process, not directly tied to a specific product.