Suppose Consumption Is $20,000 When Income Is $32,000 and the MPC

question 234

Multiple Choice

Suppose consumption is $20,000 when income is $32,000 and the MPC equals 0.8. When income increases to $40,000, consumption is

• A) $26.400.
• B) $28,000.
• C) $32,000.
• D) $72,000.

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Definitions:

Favorable

A term used in variance analysis indicating that actual costs were lower than budgeted or standard costs, leading to higher profits.

Unfavorable

A term used in variance analysis to describe a situation where actual results are worse than expected results, often leading to a negative impact on financial performance.

Raw Materials Price Variance

This variance highlights the difference between the actual cost of raw materials used in production and the standard or expected cost.

Variable Overhead Efficiency Variance

The difference between actual and budgeted variable overhead costs, attributable to differences in productive efficiency.