Suppose That Ramen Noodles Are an Inferior Good

question 215

Multiple Choice

Suppose that ramen noodles are an inferior good.When income decreases,the equilibrium quantity of ramen noodles will ________ and the equilibrium price of ramen noodles will ________.

• A) increase; increase
• B) increase; decrease
• C) decrease; increase
• D) decrease; decrease

Interpret variable overhead efficiency variance and its impact on production cost control.

Understand the significance of standard quantity and cost on the standard cost card.

Comprehend the computation and analysis of material quantity variance.

Recognize the conditions under which overhead budget variance occurs.

---

Definitions:

Labor Efficiency Variance

The difference between the actual hours of labor worked and the expected (or standard) hours, multiplied by the standard hourly labor rate.

Direct Labor

The cost of wage-earning employees who are directly involved in the production of goods or services, such as assembly line workers.

Direct Labor Rate Variance

The difference between the actual cost of direct labor and the standard cost, demonstrating how actual labor costs differ from budgeted amounts.

Materials Price Variance

The difference between the actual cost of materials used in production and the standard cost, multiplied by the quantity of materials used.