Lunchco Inc

question 26

Multiple Choice

Lunchco Inc.produces picnic tables in a two-step process.Pretreated wood is cut in the Cutting Department and then the lumber is assembled into tables in the Assembly Department.It takes 30 minutes of direct labor time to cut the lumber and the standard hourly labor rate in the Cutting Department is $12.The tables take one hour to assemble and the standard hourly rate in the Assembly Department is $10.If Lunchco's production budget is 20,000,what is the company's direct labor budget?

• A)$340,000
• B)$320,000
• C)$270,000
• D)$260,000

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Definitions:

Reservation Price

Maximum price that a customer is willing to pay for a good.

Bargaining Power

The ability of a party (individual, group, company) to exert influence over the terms and conditions of an agreement or negotiation.

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Key-number System

A comprehensive indexing system used in legal research to organize and categorize case law into various topics and subtopics.