Showcase Inc

question 100

Multiple Choice

Showcase Inc.Showcase Inc's standard variable overhead rate is $7 per direct labour hour, and each unit requires three standard direct labour hours. The company recorded 7,000 actual direct labour hours, $65,000 actual variable overhead costs, and 2,950 units of product manufactured.
-Refer to Showcase Inc. What is the total variable overhead variance?

• A) $490 U
• B) $1,000 U
• C) $2,950 U
• D) $3,050 U

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Definitions:

External Cost

A cost that a transaction or activity imposes on a party who is not involved in the transaction, often not reflected in market prices.

Negative Externality

A cost that affects a party who did not choose to incur that cost, often associated with environmental, health, and safety concerns of public and private actions.

Positive Externality

A benefit that is enjoyed by a third-party as a result of an economic transaction.

Negative Externalities

Unintended adverse effects of an economic activity on unrelated third parties; they represent a failure of the market to fully account for the impacts of transactions.