If Fixed Costs Are $500 000 and Variable Costs Are

question 24

Multiple Choice

If fixed costs are $500 000 and variable costs are 75% of the selling price,the break-even point in sales dollars is:

• A)$6 666 667
• B)$1 750 000
• C)$2 000 000
• D)$2 500 000

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Definitions:

Variable Overhead Efficiency Variance

The difference between the actual variable overhead incurred and the standard cost allocated for the actual production volume, resulting from efficiency in variable overhead resource usage.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the standard cost of variable overhead allocated for the actual production level.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected (standard) variable overhead based on actual production levels.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the standard overhead estimated, based on the actual level of activity.