Exhibit 5-3
Hayley Inc -Refer to Exhibit 5-3

question 45

Multiple Choice

Exhibit 5-3
Hayley Inc.is using the account analysis approach to identify the cost behavior of production costs for one month.The production manager was asked to review these costs and provide her best guess as to how they should be categorized.Hayley produced 200 units for the month.She responded with the following information.
$\begin{array}{lrrr}&\text { Total } &=\text { Variable } &+\text { Fixed }\\ \text { Direct materials used in production } & \$ 370,000 & \$ 370,000 & \$-0- \\\text { Direct labor used in production } & 230,000 & 230,000 & -0- \\\text { Overhead costs } & \underline{220,000} & \underline{200,000} & \underline{20,000} \\\text { Total production costs } & \underline{\$ 20,000} & \underline{\$ 800,000} & \underline{\$ 20,000}\end{array}$

-Refer to Exhibit 5-3.Which of the following best describes the production costs in equation form?

• A)Y = $20,000 * $4,000X
• B)Y = $20,000 + $4,000X
• C)Y = $800,000 + $20,000X
• D)Y = $4,100X
• E)None of the answer choices is correct.

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Definitions:

Standardized

refers to making something conform to a standard, ensuring consistency and uniformity across different situations or applications.

Differentiated

In a market, it refers to products that are distinguished from each other through variations in quality, features, branding, or customer service.

Oligopoly

A market structure in which a few firms sell either a standardized or differentiated product, into which entry is difficult, in which the firm has limited control over product price because of mutual interdependence (except when there is collusion among firms), and in which there is typically nonprice competition.

Homogeneous Product

A product that cannot be distinguished from competing products from different suppliers.