If Variable Selling and Administrative Expenses Totaled $124,000 for the Year

question 154

Multiple Choice

If variable selling and administrative expenses totaled $124,000 for the year (80,000 units at $1.55 each) and the planned variable selling and administrative expenses totaled $136,500 (78,000 units at $1.75 each) , the effect of the quantity factor on the change in variable selling and administrative expenses is:

• A) $3,000 increase
• B) $3,500 decrease
• C) $3,000 decrease
• D) $3,500 increase

---

Definitions:

Factory Overhead Cost

All indirect costs associated with manufacturing, including utilities, maintenance, and manager salaries, but not direct materials or direct labor.

Manufacturing Process

The series of steps through which raw materials are transformed into a final product, involving both physical or chemical procedures.

Direct Costs

Expenses that can be directly attributed to the production of specific goods or services, such as raw materials and labor.

Cost Object

Any item for which costs are separately measured and assigned, including products, services, projects, or departments.