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2 years ago

Which is NOT true of the various methods of allocating service department costs?

Business

1 answer:

alexandr1967 [171]2 years ago

4 0

Answer:

The statement which is NOT true of the various methods of allocating service department costs is:

b. The choice of method affects the optimal allocation of resources

Explanation:

The allocation method used by an organization does not affect whether the organization's resources are allocated optimally or not. After all, what is at stake is not the allocation of resources, but the allocation of consumed resources. An organization is free in making its choice of method. The basis for choosing an allocation method is to ensure that costs are allocated optimally and not resources.

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Answer:

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$MU_y(x,y) = 0.2 \times x^{0.8}\times y^{0.2-1} \\ \\ \implies 0.8 \times x^{0.8}\times y^{-0.8}$

and:

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∴

Using the equation MRTS:

$\dfrac{MU_x}{MU_y } =\dfrac{ Px}{Py}$

$\dfrac{ 0.8 \times x^{-0.2}\times y^{0.2} }{0.8 \times x^{0.8}\times y^{-0.8}} = \dfrac{4}{3}$

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4x = 12y

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Replacing the value of x into the budget line income, we have:

105 = 4x + 3y

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105 = 12y + 3y

105 = 15y

y = 105/15

y = 7

Then, from x = 3y

x = 3(7)

x = 21

Thus, she will consume 21 gapefruits

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