A Consumer or Producer Who Does Not Pay for Use

question 31

Multiple Choice

A consumer or producer who does not pay for use of a nonexclusive good but expects others to pay is known as a:

• A) free rider.
• B) price setter.
• C) fringe element.
• D) none of the above

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Definitions:

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected (standard) variable overhead allocated based on activity levels.

Labor Efficiency Variance

The difference between the actual hours worked and the standard hours expected to produce a certain level of output, multiplied by the standard labor rate.

Labor Rate Variance

The difference between the actual cost of labor and the expected (or standard) cost, often used in manufacturing to measure efficiency and cost management.

Favorable

A term typically used in budgeting and accounting to describe variances or outcomes that are better than expected or budgeted figures.