The Standard Variable Overhead Cost Rate for the Gordon Company

question 157

Multiple Choice

The standard variable overhead cost rate for the Gordon Company is $13.25 per unit. Budgeted fixed overhead cost is $80,000. The company budgeted 8000 units for the current period and actually produced 4100 finished units. What is the fixed overhead volume variance? Assume the allocation base for fixed overhead costs is the number of units expected to be produced.

• A)$39,000 favorable
• B)$25,675 unfavorable
• C)$25,675 favorable
• D)$39,000 unfavorable

---

Definitions:

Kinked Demand Curve Model

A model in oligopoly markets suggesting that firms may not change their prices because an increase could be ignored by rivals, while a decrease might be matched.

Price Stability

A situation in an economy where prices in general do not change significantly over time, minimizing uncertainty and conducive to economic growth.

Oligopolies

Market structures characterized by a small number of firms that have significant market power, which can influence prices and output levels.

Cartels

Formal agreements among competing firms to control prices, production, and distribution of goods, often to restrict competition and increase profits illegally.