Assuming That the Standard Fixed Overhead Rate Is Based on Full

question 127

Multiple Choice

Assuming that the standard fixed overhead rate is based on full capacity, the cost of available but unused productive capacity is indicated by the

• A) fixed factory overhead volume variance
• B) direct labor time variance
• C) direct labor rate variance
• D) variable factory overhead controllable variance

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Definitions:

Fixed Costs

Expenses that remain constant regardless of the level of outputs, like lease payments or property taxes.

Marginal Costs

The upsurge in complete costs linked to the production of a supplementary unit of a good or service.

Average Variable Costs

The total variable costs of production divided by the quantity of output produced, representing the variable cost per unit of output.

Marginal Cost

The increase or decrease in the total cost that arises when the quantity produced is incremented by one unit.