Pearce Company Pearce Company Uses a Standard Cost System for Its Production

question 203

Multiple Choice

Pearce Company
Pearce Company uses a standard cost system for its production process.Pearce Company applies overhead based on direct labor hours.The following information is available for July:

• A)$19,010 U
• B)$6,305 U
• C)$12,705 U
• D)$4,730 U

Standard:
DLH per unit	2.20
Variable overhead per DLH	$2.50
Fixed overhead per DLH
Budgeted variable overhead	$3.00
(based on 11,990 DLHs)

Actual:
Units produced	4,400
Direct labor hours	8,800
Variable overhead	$29,950
Fixed overhead	$42,300

Refer to Pearce Company Using the one-variance approach,what is the total variance?

---

Definitions:

Economies Of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.

Monopolist

A solo seller in a market who has significant control over the pricing and availability of a unique product or service.

Profit-Maximizes

The method or approach of modifying production and pricing to secure the maximum achievable profit.

Barriers To Entry

Obstacles that make it difficult for new competitors to enter a market, protecting existing firms from new entrants.