Allende Company Has Developed Capacity Standards -Refer to the Figure

question 90

Multiple Choice

Allende Company has developed capacity standards. Information is as follows for a value-added activity:
$$\begin{array} { l } \text { Activity capacity acquired }&60 \\\text { Activity capacity used } &50\\\text { Actual activity usage }&30 \\\text { Standard fixed activity rate }&\$2,000\end{array}$$
-Refer to the figure.What is the volume variance?

• A)$20,000 unfavourable
• B)$40,000 unfavourable
• C)$50,000 unfavourable
• D)$60,000 unfavourable

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Definitions:

Average Product

A metric that measures output per unit of a variable input, calculated by dividing total production by the quantity of the variable input.

Diminishing Marginal Returns

A principle stating that as additional units of a variable input are added to a fixed input, the additional output produced from each new unit decreases beyond a certain point.

Diminishing Marginal Returns

A principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot increase forever and will eventually decrease.

Marginal Product

The additional output that is produced by adding one more unit of a certain input while holding other inputs constant.