Use the Following to Answer Questions

question 194

Multiple Choice

Use the following to answer questions :
Figure: Bicycles and Radishes I
-(Figure: Bicycles and Radishes I) Look at The figure Bicycles and Radishes I. It shows the production possibility frontiers for two countries that produce only radishes and bicycles. The axes of the two graphs are measured in equivalent units. Country A is operating at point M, and country B is operating at point N. The opportunity cost of producing an additional ton of radishes would be greater in:

• A)country A.
• B)country B.
• C)neither; the opportunity cost would be the same in both countries.
• D)There is not enough information to answer the question.

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Definitions:

Conversion Costs

The combined costs of direct labor and manufacturing overhead, which are incurred to convert raw materials into finished goods.

FIFO Method

"First In, First Out," an inventory valuation method where goods first purchased or produced are sold first, affecting inventory cost and profits.

Process Costing

An accounting method used where costs are accumulated for a continuous process and then assigned to individual units of output.

Equivalent Units

A concept in cost accounting used to allocate costs to partially completed goods, making them comparable to fully completed units.