Suppose There Are Two Goods,X and Y,with X Measured on the Horizontal

question 5

Multiple Choice

Suppose there are two goods,X and Y,with X measured on the horizontal axis and Y measured on the vertical axis.Which of the following statements about a budget line relating the two goods is correct?

• A)The budget line shows all the possible combinations of X and Y a consumer can buy given the level of income and prices.
• B)The budget line shows all the possible combinations of X and Y a consumer can buy given the level of income,prices,and borrowings.
• C)The budget line shows the most preferred combinations of X and Y a consumer can buy given the level of income and prices.
• D)The budget line shows the least-cost combinations of X and Y a consumer will buy given the level of income and prices.

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Definitions:

Job Order Cost

A method of cost accounting that gathers the costs of manufacturing a specific batch or job, including labor, material, and overhead.

Manufacturing Overhead Rate

The ratio of manufacturing overhead costs to the base activity, used to allocate overhead costs to produced goods.

Machine Hours

A measure of production output or operation, calculated as the total number of hours that machinery is in use.

Overapplied Overhead

A situation in managerial accounting where the allocated manufacturing overhead costs are more than the actual overhead incurred.