Feemster Corporation Manufactures and Sells a Single Product

question 483

Multiple Choice

Feemster Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During October, the company budgeted for 5,900 units, but its actual level of activity was 5,850 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for October:Data used in budgeting: Actual results for October:
The activity variance for selling and administrative expenses in October would be closest to:

• A) $250 F
• B) $40 U
• C) $250 U
• D) $40 F

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Definitions:

Coase Theorem

A principle that suggests that if trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property rights.

Private Parties

Individuals or entities that operate privately, not part of or affiliated with government organisations.

Government Involvement

The participation or intervention by government entities in various sectors of the economy or specific activities.

Coase Theorem

A principle that suggests that if property rights are clearly defined and transaction costs are low, externalities can be efficiently resolved through private bargaining, regardless of who holds the rights.