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If the Standard to Produce a Given Amount of Product

question 55

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If the standard to produce a given amount of product is 500 direct labor hours at $15 and the actual was 600 hours at $17, the time variance was $1,500 favorable.


Definitions:

Private Marginal Cost

Private marginal cost refers to the cost that a company incurs for producing an additional unit of a good or service, excluding any external costs.

Marginal Social Cost

The total cost to society of producing one additional unit of a good or service.

Private Cost

The costs that an individual or company incurs directly as a result of its actions, excluding external costs borne by society.

Deadweight Loss

Net loss of total (consumer plus producer) surplus.

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