A Company's Prime Costs Total $3,000,000 and Its Conversion Costs

question 42

Multiple Choice

A company's prime costs total $3,000,000 and its conversion costs total $7,000,000. If direct materials are $1,000,000 and factory overhead is $5,000,000, then direct labor is:

• A) $2,000,000.
• B) $4,000,000.
• C) $1,000,000.
• D) $3,000,000.
• E) $14,000,000.

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Definitions:

Free Trade

A policy wherein a government does not discriminate against imports or interfere with exports by applying tariffs (to imports) or subsidies (to exports).

Tariffs

Government levies on goods brought into the country.

Import Quotas

Import Quotas are government-imposed limits on the quantity or value of goods that can be imported into a country, typically used to protect domestic industries and control trade balances.

Acquired Comparative Advantage

An advantage a country develops over time in producing certain goods or services, often through investment in education, infrastructure, or technology.