If Overhead Is Applied to Production Using Direct Labor Hours

question 20

Multiple Choice

If overhead is applied to production using direct labor hours and the direct labor efficiency variance is favorable, then the variable overhead efficiency variance is:

• A) favorable.
• B) unfavorable.
• C) either favorable or unfavorable.
• D) neither favorable nor unfavorable.

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Definitions:

Bliss Point

The optimal quantity of consumption where any further increase or decrease would lead to lower satisfaction or utility.

Absolute Values

A mathematical operation that measures the distance of a number from zero on the number line, disregarding direction.

Indifference Curve

A graphical representation showing different combinations of two goods that provide an individual with the same level of satisfaction.

Favorite Bundle

In economic theory, it refers to the most preferred combination of goods and services by an individual or consumer.