A Firm Produces and Sells Two Products,Plus and Max

question 6

Multiple Choice

A firm produces and sells two products,Plus and Max.The following information is available relating to setup costs (a part of factory overhead) :
-Using direct labor hours as the allocation base,the setup cost portion of overhead that is allocated to each unit of product for Plus and Max,respectively is:

• A)$.80; $.80.
• B)$3.20; $3.20.
• C)$4.00; $4.00.
• D)$160.00; $12,800.00.
• E)$200.00; $16,000.00.

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Definitions:

Profitable

A financial status where the income or revenue generated exceeds the costs or expenses, resulting in a financial gain.

Natural Monopoly

A market where a single supplier can produce output at a lower cost than multiple competitors, often due to economies of scale.

Increasing Returns

A situation where the input in a production process is increased and the output increases at a proportionally higher rate.

Price Discrimination

Charging different prices to different consumers for the same good.