Use the Following Information for the Next 7 Questions

question 3

Multiple Choice

Use the following information for the next 7 questions.
A small accounting firm budgets 200 hours of billings for the next month, and 60% of these hours are expected to be for tax return preparation services, with the remaining 40% for bookkeeping services. Tax work is billed at $50 per hour, and bookkeeping work is billed at $40 per hour. The variable costs for both types of services are $10 per hour. During the month 180 hours were billed, 90 of which were for tax work.
-(Appendix 11A) The revenue sales quantity variance was

• A) $720 unfavorable
• B) $540 favorable
• C) $900 unfavorable
• D) $180 unfavorable

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Definitions:

Base Year

A specific year against which economic or financial data is measured and compared to track growth, inflation, or other economic indicators.

Cyclical Unemployment

A type of unemployment that relates to the cyclic trends in the economy over time, often tied to changes in the business cycle.

Overall Unemployment Rate

The percentage of the labor force that is jobless and actively seeking employment, reflecting the health of an economy.

Inflation

The upward movement in the overall price points of goods and services, cutting down on purchasing strength.