Good a and Good B Are Substitutes in Production

question 113

Multiple Choice

Good A and good B are substitutes in production. The demand for good A decreases, which lowers the price of good A. The decrease in the price of good A

• A)increases the supply of good B.
• B)decreases the demand for good B.
• C)increases the demand for good B.
• D)decreases the supply of good B.

---

Definitions:

Fixed Overhead Volume Variance

The difference between the budgeted and actual fixed overhead costs, attributed to variations in production volume.

Fixed Overhead Budget Variance

This variance measures the difference between the actual fixed overhead costs incurred and the budgeted fixed overhead costs. It helps identify discrepancies in planned versus actual spending.

Direct Labor-hours

A measure of the labor time directly involved in the production of goods, used as a base for allocating overhead in some costing systems.

Fixed Overhead

Expenses that remain constant for a certain level of production or period of time, such as rent, salaries, and insurance, not directly tied to the level of production.