Cheapo Sales Company Uses a Standard Cost System

question 167

Multiple Choice

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

Reduction Division

Another term for Meiosis I, the first division in meiosis where the chromosome number is halved from diploid to haploid.

Autonomic Reflex

An involuntary response mediated by the autonomic nervous system to maintain homeostasis.

Parasympathetic Nerve Fibers

Nerve fibers of the parasympathetic nervous system, which promote relaxation, nutrient digestion, and energy conservation in the body.

Sympathetic Nerve Fibers

Part of the autonomic nervous system that prepares the body for physical and mental activity by controlling the flight or fight response.