Akao Products Uses a Standard Cost System

question 89

Multiple Choice

Akao Products uses a standard cost system.Variable overhead costs are allocated based on direct labor hours.In the first quarter,Akao had an unfavorable 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:

Agency Agreement

An agreement creating an agency relationship between principal and agent.

Representation

In law, a statement of fact made to induce someone into a contract or a presentation by one party in a lawsuit on behalf of another.

Tort

An action that causes harm or injury to another person.

Estoppel

A legal principle that prevents someone from arguing something contrary to a claim they previously made or an action they took.