At Overland Company, Maintenance Cost Is Exclusively a Variable Cost

question 121

Multiple Choice

At Overland Company, maintenance cost is exclusively a variable cost that varies directly with machine-hours. The performance report for July showed that actual maintenance costs totaled $9,800 and that the associated rate variance was $200 unfavorable. If 8,000 machine-hours were actually worked during July, the budgeted maintenance cost per machine-hour was:

• A) $1.20
• B) $1.25
• C) $1.275
• D) $1.225

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Definitions:

Innovation Encouragement

Initiatives or policies designed to foster new ideas, products, or methods, particularly in technology, medicine, or other fields.

Economic Profit

The difference between a firm's total revenues and the sum of its explicit and implicit costs, indicating its overall financial health beyond just accounting profits.

Ideal Economic Efficiency

Achieving the optimum level of output and resource allocation where no individual or preference can be made better off without making someone else worse off.

Monopolist

A market participant that is the sole seller of a good or service, with significant control over its price.