Cavalaris Products Uses a Standard Cost System

question 221

Multiple Choice

Cavalaris Products uses a standard cost system.Variable overhead costs are allocated based on direct labor hours.In the first quarter,Cavalaris had an unfavorable cost variance for variable overhead costs.Which of the following scenarios is a reasonable explanation for this variance?

• A) The actual number of direct labor hours was lower than the budgeted hours.
• B) The actual variable overhead costs were higher than the budgeted costs.
• C) The actual variable overhead costs were lower than the budgeted costs.
• D) The actual number of direct labor hours was higher than the budgeted hours.

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Definitions:

Productivity

The measure of output per unit of input, reflecting the efficiency of production.

Discriminates

The act of unjustly distinguishing or treating people differently based on characteristics such as race, age, gender, etc.

Higher Costs

Situations in which the expenses related to producing or obtaining goods and services increase, leading to a rise in prices or a squeeze on profit margins.

Labor-Market Discrimination

The differential treatment of individuals in the labor market based on race, gender, religion, age, sexual orientation, or other non-relevant factors that reduces prospects for equal opportunity employment.