David Takes 10 Minutes to Process a Customer,and 20 Minutes

question 138

Multiple Choice

David takes 10 minutes to process a customer,and 20 minutes to stock the shelves.Danny takes 15 minutes to process a customer,and 15 minutes to stock the shelves.Which of the following statements is true?

• A) David has an absolute advantage in performing both tasks.
• B) Danny has an absolute advantage in performing both tasks.
• C) David has a comparative advantage in processing customers but not in stocking shelves.
• D) Danny has a comparative advantage in processing customers but not in stocking shelves.
• E) Danny has a comparative advantage in processing customers and in stocking shelves.

Recognize the impact of fixed and variable costs in cost accounting.

Assess how changes in production and inventory levels affect gross profit and ending inventory valuation.

Understand the strategic implications of using different costing methods for internal decision making and external reporting.

Analyze the repercussions of adopting absorption or variable costing on a firm’s income statement and balance sheet.

---

Definitions:

Free Markets

Economic systems in which prices for goods and services are determined by the open market and consumers, with minimal government intervention.

Economic Competition

A condition in markets where businesses or sellers independently strive for the consumers' patronage to achieve a particular business objective, such as profits or market share.

Deregulation

The process of removing or reducing state regulations, typically in the economic sphere, to encourage free-market competition.

Republican Party

A major political party in the United States, also known as the GOP (Grand Old Party), which traditionally supports conservative policies, including smaller government, lower taxes, and strong national defense.