Refer to Scenario 3

question 36

Multiple Choice

Refer to Scenario 3.1 below to answer the questions that follow.
SCENARIO 3.1: Rented DVDs and movies shown in theaters are substitutes. Rented DVDs and plasma TVs are complements. Plasma TVs and movies shown in theaters are normal goods. People watch rented DVDs more often in the winter than in the summer.
-Refer to Scenario 3.1. You observe that the rental price for DVDs is higher in the winter than in the summer. This would be explained by the fact that

• A) demand for rented DVDs is higher in the winter than in the summer.
• B) the quantity demanded of rented DVDs is higher in the winter than in the summer.
• C) there are more DVDs released into the rental market in the winter than in the summer.
• D) consumer income tends to fall in the winter and increase in the summer.

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Definitions:

Variable Overhead Rate Variance

The difference between the actual variable overhead costs incurred and the expected costs based on the standard variable overhead rate.

Materials Quantity Variance

The deviation between the realized quantity of materials consumed in production and the forecasted quantity, multiplied by the set cost per unit.

March

The third month of the year in the Gregorian calendar, known for marking the change from winter to spring in the Northern Hemisphere.

Materials Price Variance

The difference between the actual cost of materials used in production and the expected (standard) cost.