Magliacane Corporation Is a Service Company That Measures Its Output

question 490

Multiple Choice

Magliacane Corporation is a service company that measures its output by the number of customers served. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes. When the company prepared its planning budget at the beginning of February, it assumed that 39 customers would have been served. However, 35 customers were actually served during February.The revenue in the company's flexible budget for February would have been closest to:

• A) $170,709
• B) $167,700
• C) $153,200
• D) $150,500

Relate the concepts of investment, savings, and economic growth to shifts in the PPF.

Explain how the PPF illustrates the trade-offs between producing different combinations of goods.

Understand how efficiency and inefficiency are depicted by the PPF.

Associate the production of specific goods with points on the PPF, understanding opportunity costs related to varying production levels.

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Definitions:

Standard Overhead Cost

The pre-determined or estimated cost of indirect expenses that a company expects to incur during a specific period.

Direct Labor Cost Variance

The difference between the budgeted cost of direct labor for production and the actual cost incurred, indicating over or under allocation of resources.

Direct Labor Rate Variance

The difference between the actual cost of direct labor and the expected (or standard) cost, indicating discrepancies in workforce expenses.

Direct Labor Efficiency Variance

A measure of the difference between the actual hours worked and the standard hours expected for the production accomplished.