The Mixed-Up Floor Co

question 36

Multiple Choice

The Mixed-Up Floor Co.Ltd makes two products,carpet polish and floor deodoriser.Operating information from the previous year is as follows.Fixed costs of $20 000 per year are presently allocated evenly between both products.If the product mix were to change,total fixed costs would remain the same.Assuming everything produced for either product can be sold,how many units of each product should be produced and sold if machine hours are limited to 10 000?

Carpet polish
Floor deodoriser

• A) 10 000 units 0 units
• B) 5 000 units 10 000 units
• C) 8 000 units 4000 units
• D) 0 units 20 000 units

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Definitions:

Extraction Costs

The expenses associated with removing natural resources or raw materials from the earth, which can include labor, equipment, and regulatory compliance costs.

Market Price

Market price is the current price at which a good or service can be bought or sold in an open market.

TX Oil Company

Refers to any company engaged in the exploration, extraction, refining, and marketing of oil and gas based in Texas, a significant player in the global energy sector.

User Costs

The expense incurred from using a good or service, including the cost of wear and tear, consumption of resources, and any loss of value or opportunity costs.