Novelli Corporation Makes a Product Whose Variable Overhead Standards Are

question 130

Multiple Choice

Novelli Corporation makes a product whose variable overhead standards are based on direct labor-hours. The quantity standard is 0.6 hours per unit. The variable overhead rate standard is $5.00 per hour. In September the company produced 1,600 units using 950 direct labor-hours. The actual variable overhead rate was $5.10 per hour.
-The variable overhead efficiency variance for September is:

• A)$51 U
• B)$50 U
• C)$51 F
• D)$50 F

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Definitions:

Coase Theorem

A principle that asserts if property rights are clearly defined and transaction costs are low, private negotiations will lead to the efficient resolution of disputes over the allocation of resources.

Transaction Costs

The costs that parties incur during the process of agreeing to and following through on a bargain.

Mutually Beneficial Agreement

An arrangement between parties where both or all receive benefits or advantages.

Coase Theorem

A legal and economic theory that states that if trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property.