In the Three-Variance Method of Factory Overhead Analysis,what Standard Cost

question 44

Multiple Choice

In the three-variance method of factory overhead analysis,what standard cost variance represents the difference between actual factory overhead incurred and budgeted factory overhead based on actual hours worked?

• A)Production-volume variance
• B)Efficiency variance
• C)Spending variance
• D)Quantity variance

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Definitions:

Contribution Margin

The difference between sales revenue and variable costs, indicating how much revenue contributes to covering fixed costs.

Fixed Costs

Expenses that do not change in total regardless of the level of production or sales activity, such as rent, salaries, and insurance.

Marginal Costs

The additional cost incurred by producing one extra unit of a product or service.

Economic Profits

Profits exceeding the opportunity costs of a next best alternative, measuring the extent to which a firm has generated excess returns over its costs, including the cost of capital.