The Following Standards for Variable Overhead Have Been Established for a Company

question 156

Multiple Choice

The following standards for variable overhead have been established for a company that makes only one product: The following data pertain to operations for the last month:
-What is the variable overhead efficiency variance for the month?

• A) $2,553 U
• B) $6,747 U
• C) $6,747 F
• D) $6,864 U

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Definitions:

Inventory Turnover Rate

A measure of how quickly a company sells and replaces its stock of goods within a given period, indicating the efficiency of its inventory management.

Opportunity Cost

The expense associated with foregoing the next most favorable option when a choice is made.

Restrictive Policy

Policies or conditions imposed by lending institutions or governments that limit certain activities or operations to reduce risk.

Just-in-time

A production strategy that aims to reduce in-process inventory and associated carrying costs by producing goods only as they are needed in the production process.