John and Mary Work at a Bakery

question 41

Multiple Choice

John and Mary work at a bakery. John can decorate either 10 ice-cream cakes or 4 wedding cakes; Mary can decorate either 8 ice-cream cakes or 2 wedding cakes. According to this scenario

• A)the opportunity cost of decorating a wedding cake for Mary is 4 ice-cream cakes.
• B)the opportunity cost of decorating a wedding cake for Mary is 1/4 ice-cream cake.
• C)the opportunity cost of decorating a wedding cake for Mary is 2 1/2 ice-cream cakes.
• D)the opportunity cost of decorating a wedding cake for Mary is 2/5 ice-cream cake.

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Definitions:

Average Cost Method

An inventory valuation method that calculates the cost of goods sold and ending inventory value based on the average cost of all similar items in inventory.

Direct Materials

Raw materials that can be directly traced to the production of goods in the manufacturing process.

Lean Manufacturing

A methodical procedure designed to cut down on waste in a factory setup without reducing work efficiency.

Manufacturing Cells

Groups of machines and/or workstations arranged closely together to manufacture similar products or components, enhancing production efficiency and flexibility.