This is a comprehensive problem comparing absorption costing and ABC.It is suggested that as you progress through the problem,keep track of the correct solutions,because these values will be used again later in the problem set. Dehli Inkstone specializes in inkstone creation.Each finished inkstone needs 1½ pounds of special materials which cost $20 a pound.(One pound contains 16 ounces. ) Drilling requires 1 direct labor hour,for which workers are paid $10 per hour,and 40 minutes of machine time.The preliminary product (a 'basic') is inspected to ensure that it is sound.Fifteen percent of the basics are rejected.It is not possible to rework these,and they have no salvage value.Each approved stone is handed to a master craftsperson who spends two hours making a 'Standard' product or three hours creating a 'Masterpiece'.Standards use half an hour of machine time and Masterpieces one hour.Finished inkstones are inspected again before packing.Four percent of finished products fail the final quality control assessment and are destroyed.Crafts persons are paid $18 per hour.It takes a 'basic' worker six minutes to package each inkstone in bubble wrap and a shipping carton,which cost 50 cents in materials and weigh 6 ounces in total.
Total overheads are estimated to be $587,400 per year and 97,900 direct labor hours are budgeted.Production plans for the year call for 60% of output to be Standard inkstones and the balance Masterpieces.
For a Standard inkstone,which is true of the machine hours (MH) needed (to 3 decimal places) ?

A) Total MH are 1.188
B) Total MH are 1.305
C) Total MH are 1.338
D) Total MH are 1.397
E) None of the choices are correct

Which of the following best explains the difference between neoclassical economics and behavioral economics?

A) Neoclassical economics believes that government should play a minimal role in the economy, while behavioral economics calls for a more active role for government.
B) Neoclassical economics assumes that people are rational in their decision making, while behavioral economics believes people make systematic errors.
C) There is no real difference; behavioral economics just studies more intently how the rational decision-making process works.
D) Neoclassical economics no longer offers valid explanations for economic outcomes, while behavioral economics does.

Another term for political savvy is political power which the ability to effectively understand others at work, and to use such knowledge to influence others to act in ways that enhance one's personal and/or organizational objectives.

A short-run total cost schedule is a ________ cost schedule shifted upward by the amount of ________ cost.

A) total fixed; marginal
B) marginal; total variable
C) total variable; total fixed
D) total variable; marginal

Management skills can be learned through training and on-the-job experiences.

According to scientific management, workers produced more when paid by the hour.