Greta Starts Using a New Baking Technique, and She Can

question 123

Multiple Choice

Greta starts using a new baking technique, and she can now do twice as much of everything. In a single day Greta can now make 10 cakes or 8 pies, rather than the 5 cakes and 4 pies she could previously bake. Greta's production possibility frontier has _____, but her opportunity costs of making pies _____.

• A)shifted right; are unchanged
• B)shifted right; have decreased
• C)not changed; have increased
• D)not changed; have decreased

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Definitions:

Reciprocal Services Method

An approach used to allocate costs between different departments within a company that provide services to each other, maintaining a balanced internal economy.

Support Department Costs

Expenses incurred by departments that do not directly generate revenue but support those that do.

Production Departments

Divisions or areas within a manufacturing facility where specific types of products or components are produced.

Multiple Production Department Rates

A method of applying overhead to products in which overhead costs are first directly traced or distributed to support and production departments.