Use the Figure to Answer the Following Question(s)

question 125

Multiple Choice

Use the figure to answer the following question(s) .
Figure 12-2
-If an unanticipated increase in demand in Figure 12-2 shifts the demand for accountants from D₁ to D₂, how will the higher level of demand influence the wages of accountants in the short run and the long run?

• A) In the short run, wages will increase to W₂, but the wage increase will be smaller in the long run.
• B) In the short run, wages will be less than W₂, but in the long run, they will rise to W₂.
• C) In the short run, wages will increase to W₂, and in the long run, they will be even higher than W₂.
• D) Employment will increase, but the higher level of demand will not alter the wages of accountants.

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Definitions:

Direct Materials Price Variance

The difference between the actual cost and the standard cost of materials used in production, indicating how effectively a company manages its material costs.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels of the organization.

Variable Budget

A financial plan that adjusts for changes in the volume of activity, allowing for flexible cost controls depending on actual performance.

Management by Exception

A management strategy where only significant deviations from set standards are brought to the attention of management.