-Refer to the Figure Above

question 20

Multiple Choice

-Refer to the figure above. At the 10th unit of action, which of the following is true?

• A)Marginal cost exceeds marginal benefit.
• B)Marginal benefit exceeds marginal cost.
• C)Total losses are minimized.
• D)Total gains are maximized.

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Definitions:

Standard Factory Overhead Rate

A rate used to allocate factory overhead costs to products based on expected factory activity.

Machine Hour

Refers to the total number of hours a piece of machinery or equipment is actually used in production, often used in allocating manufacturing costs based on machine hours.

Normal Capacity

Normal capacity is the expected production output or service level that a company can achieve under normal conditions, considering limitations such as time and resources.

Fixed Overhead Volume Variance

The difference between the budgeted and actual quantity of units produced, multiplied by the fixed overhead rate per unit.