Table 11-5 A Small Strip Mall Contains Four Retail Stores, and Crime

question 212

Multiple Choice

Table 11-5
A small strip mall contains four retail stores, and crime has recently been on the increase in the neighborhood of the strip mall. The owners of the four stores - Stores A, B, C, and D - are considering contributing to a pool of money that will be used to hire up to 4 security guards. The table represents their willingness to pay, that is, the maximum amount that each store owner is willing to contribute, per day, to hire each security guard.

-Refer to Table 11-5.Suppose the cost to hire each individual guard is $75 per day.Then total surplus for the 4 store owners is

• A) $75 if 1 guard is hired.
• B) $110 if 2 guards are hired.
• C) $130 if 3 guards are hired.
• D) $105 if 4 guards are hired.

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Definitions:

Labour Efficiency Variance

The difference between the budgeted labor hours or costs and the actual labor hours or costs incurred.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead based on hours worked and the standard cost of variable overhead for those hours.

Standard Variable Overhead Rate

The predetermined rate at which variable overhead costs are applied to production activities, based on an expected level of activity.