Answer the Following Questions Using the Information Below:
Fearless Frank's

question 88

Multiple Choice

Answer the following questions using the information below:
Fearless Frank's Fertiliser Farm produces fertiliser and distributes the product by using his tanker trucks.Frank's uses budgeted fleet hours to allocate variable manufacturing overhead.The following information pertains to the company's manufacturing overhead data:
$\begin{array}{lr}\text { Budgeted output urits } & 450 \text { truckloads } \\\text { Budgeted fleet hours } & 350 \text { hours } \\\text { Budgeted kilos of fertiliser } & 12000000 \text { kilos } \\\text { Budgeted variable manufacturing overhead costs for } 450 \text { loads } & \$ 50000\\\\\text { Actual output units produced and delivered } & 470 \text { truckloads } \\\text { Actual fleet hours } & 327 \text { hours } \\\text { Actual kilos of fertiliser produced and delivered } & 12600000 \text { kilos } \\\text { Actual variable manufacturing overhead costs } & \$ 52250\end{array}$
-What is the flexible-budget variance for variable manufacturing overhead?

• A)$27.78 favourable
• B)$27.78 unfavourable
• C)zero
• D)None of these answers are correct.

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Definitions:

Economies of Scale

Companies experience a decrease in the average cost of production as they scale up their operations, resulting in cost efficiencies.

Natural Monopoly

A market condition where due to high fixed costs or unique resources, one firm can supply the entire market more efficiently than if there were multiple firms.

Total Demand

Total demand represents the entire quantity of a particular good or service that all consumers in a market are willing to purchase at various price points over a specific time frame.

Exclusive Right

A legal authorization to be the sole provider or producer of a particular product or service, or to use a specific piece of intellectual property.