Draco, Inc. Has the Following Overhead Standards

question 61

Multiple Choice

Draco, Inc. has the following overhead standards:
Variable overhead: 4 hours at $8 per hour
Fixed overhead: 4 hours at $10 per hour
The standards were based on a planned activity of 20,000 machine hours when 5,000 units were scheduled for production. Actual data follow.
Variable overhead incurred: $167,750
Fixed overhead incurred: $210,000
Machine hours worked: 19,800
Actual units produced: 5,100
Draco's variable-overhead efficiency variance is:

• A) $550 favorable.
• B) $550 unfavorable.
• C) $4,800 favorable.
• D) $4,800 unfavorable.
• E) None of the other answers are correct.

Interpret economic models and data tables to calculate profit, loss, and optimal production levels.

Distinguish between short-run and long-run decision-making for firms in competitive markets.

Recognize the role of market price in a firm's revenue and cost calculations.

Explain the impact of market demand changes on firm profits in price-taker markets.

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