A Time-And-Motion Study Revealed That It Should Take 3 Hours

question 107

Multiple Choice

A time-and-motion study revealed that it should take 3 hours to produce a product that currently takes 7.5 hours to produce. Labor is $18 per hour. The value-added costs are

• A)$27.
• B)$135.
• C)$81.
• D)$54.

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Definitions:

MC = P

A condition in economic theory where Marginal Cost (MC) equals Price (P), indicating optimal production levels where no additional units should be produced.

Profit

The financial gain obtained when the total revenues generated exceed the total costs incurred by a business.

Marginal Cost

The growth in total expenses incurred from the production of one more unit.

Output

The total amount of goods or services produced by a firm or country.