Variable Manufacturing Overhead Is Applied to Products on the Basis

question 225

Multiple Choice

Variable manufacturing overhead is applied to products on the basis of standard direct labor-hours. If the labor efficiency variance is favorable, the variable overhead efficiency variance will be:

• A) favorable.
• B) unfavorable.
• C) zero.
• D) either favorable or unfavorable.

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Definitions:

Optimal Level

The most efficient, effective, or desirable point or degree for a specific outcome or condition.

Monopolistically Competitive

Pertains to a market structure where many firms sell products that are similar but not identical, allowing for some degree of market power and product differentiation.

Positive Economic Profits

Occur when a firm's total revenues exceed all its costs, including both explicit and implicit costs, indicating superior performance or a competitive advantage.

Short Run

A period during which at least one input, such as plant size, is fixed and cannot be varied.