During the Period Cash Spinner Produced 2,000 Units of Product

question 149

Multiple Choice

During the period Cash Spinner produced 2,000 units of product. The flexible budget for standard costs is: $\begin{array} { l r } \quad\quad\text { Direct materials } & \$ 43,000 \\\quad\quad\text { Direct labor } & 67,000 \\\quad\quad\text { Variable overhead } & 30,000 \\\quad\quad\text { Fixed overhead } & 25,000 \\\text { Variances for the period are: } & \\\quad\quad\text { Direct materials price } & \$ 400 \mathrm { U } \\\quad\text { Direct materials efficiency } & 500 \mathrm {~F} \\\quad\text { Direct labor price } & 600 \mathrm {~F} \\\quad\text { Direct labor efficiency } & 200 \mathrm { U } \\\quad\text { Variable overhead spending } & 300 \mathrm {~F} \\\quad\text { Variable overhead efficiency } & 100 \mathrm {~F} \\\quad\text { Fixed overhead spending } & 500 \mathrm {~F} \\\quad\text { Fixed overhead production volume } & 1,000 \mathrm { U }\end{array}$

The direct materials inventory increased during the period by 500 (at standard cost) . The variable overhead allocated was:

• A) $29,600
• B) $30,000
• C) $29,900
• D) $30,400

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Definitions:

Equilibrium Price

The price at which the quantity of a good demanded by consumers equals the quantity supplied by producers, leading to a balance where there is no tendency for the price to change.

Price Ceiling

A regulatory limit placed on the amount that can be charged for commodities and services, to prevent market imbalances.

Equilibrium Price

The price at which the quantity of a good or service supplied matches the quantity demanded, leading to market stability.

Market Price

The price at which goods and services are bought and sold in a competitive marketplace, reflecting supply and demand dynamics.