A Company Is Evaluating Which of Two Alternatives Should Be

question 29

Multiple Choice

A company is evaluating which of two alternatives should be used to produce a product that will sell for $35.00 per unit.The following cost information describes the two alternatives

If total demand volume) is 150,000 units,then the company should

• A)select Process A with a profit of $1,300,000 to maximize profit
• B)select Process B with a profit of $750,000 to maximize profit
• C)select Process A with a profit of $1,000,000 to maximize profit
• D)select Process B with a profit of $1,050,000 to maximize profit

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Definitions:

Supply of Labor

The total hours that workers wish to work at a given wage rate, reflecting how many people are available to work.

Nominal Wage

The amount of money received by a worker per unit of time (hour, day, etc.); money wage.

Price Level

A measure of the average prices of goods and services in an economy, often used to evaluate inflation or deflation over time.

Real Wage

The amount of goods and services a worker can purchase with his or her nominal wage; the purchasing power of the nominal wage.