In Comparing the Magnitudes of the Components of GDP According

question 27

Multiple Choice

In comparing the magnitudes of the components of GDP according to the expenditure approach, we see that in Australia,

• A) investment is less than government expenditure on goods and services.
• B) investment is larger than government expenditure on goods and services.
• C) government expenditure on goods and services is the largest category.
• D) investment is the largest category.
• E) investment, government expenditure on goods and services, and consumption expenditure are all about the same size.

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Definitions:

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected (standard) cost based on the actual level of activity.

Materials Price Variance

The difference between the actual cost of direct materials and the standard cost, multiplied by the actual quantity of materials purchased.

Labor Rate Variance

The difference between the expected cost of labor per unit of production and the actual cost, often used to identify efficiency and wage rate changes.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead incurred and the standard cost allocated for the actual production volume, resulting from efficiency in variable overhead resource usage.