Use the Information Below to Answer the Following Questions -Refer to the Table Above

question 11

Multiple Choice

Use the information below to answer the following questions. $$\begin{array} { l c c } & \text { Budget for April } & \text { Actual for April } \\\text { Output } & 40,000 \text { units } & 40,000 \text { units } \\\text { Sales } & \$ 400,000 & \$ 400,000 \\\text { Raw materials } & \$ 80,000 & \$ 88,000 \\\text { Labour } & \$ 200,000 & \$ 180,000 \\\text { Overheads } & 225,000 & 305,000\end{array}$$
-Refer to the table above. The labour variance can best be described as:

• A)an adverse variance resulting from excessive use of labour and/or a rise in the hourly rate of pay.
• B)a favourable variance resulting from the efficient use of labour and/or a reduction in the hourly pay rate.
• C)being caused by an increase in the pay rate for labour.
• D)being caused by more efficient labour.

---

Definitions:

Forecasting Ability

The capability to predict future trends, events, or behaviors based on past and current data.

Complex Reality

The concept that reality is composed of many interacting components that can be difficult to fully understand or predict.

Economic Theory

A set of principles and models that attempts to explain the relationships among economic variables and to predict future economic outcomes.

Realistic Assumptions

Assumptions made in economic models that aim to closely reflect actual conditions and behaviors in the real world.