Use the Following Information to Answer Questions
EKPN Company

question 105

Multiple Choice

Use the following information to answer questions
EKPN Company prepared the following data in its static budget based on 150,000 machine hours:
$$\begin{array} { l l } \text { Direct Materials } & \$ 4 5 0 , 0 0 0 \\\text { Direct Labour } & 2 2 5 , 0 0 0 \\\text { Variable Overhead } & 1,125,000 \\\text { Fixed Overhead } & \mathbf { 2 } , 100,000\end{array}$$ $$\begin{array} { l l } \text { Actual Results: } & \\\text { Machine Hours } & 160,000 \text { hours } \\\text { Direct Materials } & \$ 475,000 \\\text { Direct Labaur } & 2 4 5 , 000 \\\text { Variable Overhead } & 1,150,000 \\\text { Fixed Overhead } & \mathbf { 2 } , 110,000\end{array}$$
-What possible reason could explain the difference between the actual fixed overhead costs and the budgeted fixed overhead costs?

• A)EKPN Company's actual machine hours were greater than the budgeted amount.
• B)EKPN Company's actual machine hours were less than the budgeted amount.
• C)EKPN Company spent more on fixed costs than it expected.
• D)EKPN Company spent less on fixed costs than expected.

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Definitions:

Price Promotions

Short-term strategies to reduce prices of products or services with the aim to increase customer interest and sales.

Reminder Advertising

A type of advertising aimed at keeping a brand or product in the mind of consumers, emphasizing brand recall.

Product Life Cycle

The series of stages a product goes through from introduction to the market to its decline and eventual withdrawal.

Maturity Stage

A phase in the product life cycle characterized by a slowdown in sales growth as the product reaches widespread acceptance and market saturation.