Discount Sales Company Uses a Standard Cost System

question 65

Multiple Choice

Discount Sales Company uses a standard cost system.Variable overhead costs are allocated based on direct labor hours.In the first quarter,Discount Sales had a favorable 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:

Cleavage

The tendency of a mineral to break along smooth flat surfaces according to its crystal structure.

Luster

The way a mineral reflects light from its surface, which can be metallic, glassy, dull, etc., and is used in mineral identification.

Color

The characteristic of visual perception described through hue, saturation, and brightness.

Hematite

An iron oxide mineral with a metallic luster and reddish-brown streak, commonly used as an ore of iron.