If an Excise Tax Is Imposed on Shirts

question 25

Multiple Choice

If an excise tax is imposed on shirts,

• A) the number of shirts produced will exceed the number demanded
• B) the number of shirts demanded will exceed the number supplied
• C) the equilibrium market price will decrease
• D) the amount consumers pay for each shirt will decrease
• E) the net revenue producers receive from each shirt will decrease

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Definitions:

Direct Labor Quantity Variance

This refers to the difference between the actual labor hours worked and the standard labor hours that should have been worked for the actual level of production, multiplied by the standard hourly wage rate.

Direct Labor Cost

The expense incurred by a company for wages, benefits, and other costs for employees who work directly on the manufacturing of products.

Produced

Refers to the quantity of goods or services created by a company during a specific time period.

Predetermined Overhead Rate

A rate calculated before a period begins, used to apply manufacturing overhead costs to products based on a specified activity base.