The Allowable Decrease for a Constraint Is

question 4

Multiple Choice

The allowable decrease for a constraint is

• A) how many more units of resource to purchase to maximize profits.
• B) the amount by which the resource can decrease given shadow price.
• C) how much resource to use to get the optimal solution.
• D) the amount by which constraint coefficient can increase without changing the final optimal value.

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Definitions:

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected (standard) variable overhead allocated based on activity levels.

Labor Efficiency Variance

The difference between the actual hours worked and the standard hours expected to produce a certain level of output, multiplied by the standard labor rate.

Labor Rate Variance

The difference between the actual cost of labor and the expected (or standard) cost, often used in manufacturing to measure efficiency and cost management.

Favorable

A term typically used in budgeting and accounting to describe variances or outcomes that are better than expected or budgeted figures.