Use the Figure Below to Answer the Following Question(s)

question 72

Multiple Choice

Use the figure below to answer the following question(s) .
Figure 4-13
-Refer to Figure 4-13. The supply curve S and the demand curve D₁ indicate initial conditions in the market for flu shots. A new government program is implemented that grants buyers a $25 subsidy when they buy a flu shot, shifting the demand curve from D₁ to D₂. Which of the following is true for this subsidy given the information provided in the exhibit?

• A) Buyers of flu shots will receive an actual benefit of $10 from the subsidy, while sellers of flu shots will receive an actual benefit of $15 from the subsidy.
• B) Buyers of flu shots will receive an actual benefit of $15 from the subsidy, while sellers of flu shots will receive an actual benefit of $10 from the subsidy.
• C) Buyers of flu shots will receive the full $25 benefit from the subsidy.
• D) Sellers of flu shots will receive the full $25 benefit from the subsidy.

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Definitions:

Two-Variance Analysis

An analytical technique in managerial accounting where variances between expected and actual performance are divided into a volume variance and a rate or efficiency variance.

Overhead Controllable

Expenses incurred in the running of a business that management can directly influence or control, such as supplies and advertising.

Overhead Volume

Overhead Volume refers to the level of overhead costs that correlate with the level of production or activity in a company.

Variance Reports

Reports that analyze the difference between planned figures and actual figures for a particular metric, helping management understand performance discrepancies.