Illescas Corporation Manufactures and Sells a Single Product

question 377

Multiple Choice

Illescas Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During December, the company budgeted for 6,400 units, but its actual level of activity was 6,440 units. The company has provided the following data concerning the formulas to be used in its budgeting: The direct labor in the planning budget for December would be closest to:

• A)$40,412
• B)$40,572
• C)$40,161
• D)$40,320

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Definitions:

Aggregate Demand

The total demand for all goods and services within a particular economy at a given overall price level and in a given time period.

Interest Rate

The percentage at which interest is paid by a borrower for the use of money they borrow from a lender, often expressed as an annual percentage rate (APR).

Multiplier

In macroeconomics, a factor that quantifies how an initial change in spending will affect total economic output.

Crowding-out Effects

The phenomenon where increased government spending leads to a reduction in private sector spending.