Kraft, Inc

question 133

Multiple Choice

Kraft, Inc., has two producing departments.Each producing department is held responsible for a share of the costs of a support department. Actual and budgeted data are as follows:
Normal support department usage is 8,000 hours each for Department X and Department Y.
-Assuming the direct method is used and the purpose is performance evaluation, support department costs allocated to Department X are

• A) $45,000.
• B) $40,000.
• C) $36,400.
• D) $36,000.

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Definitions:

Long-Run Profits

Long-run profits are the earnings a firm expects to achieve over a period during which all inputs, including capital, can be fully adjusted.

Elastic

Describes a situation where the demand or supply for a good or service significantly changes in response to changes in price.

Pure Competition

A market structure characterized by a large number of buyers and sellers, uniform products, and free entry and exit, leading to price taking behaviour.

Excess Capacity

A situation where a firm is producing at a level less than its potential maximum output, indicating underutilization of resources.