Palczewski Corporation Manufactures and Sells a Single Product

question 25

Multiple Choice

Palczewski Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During December, the company budgeted for 5,000 units, but its actual level of activity was 4,980 units. The company has provided the following data concerning the formulas to be used in its budgeting:
-The activity variance for selling and administrative expenses in December would be closest to:

• A) $14 U
• B) $14 F
• C) $1,206 F
• D) $1,206 U

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Definitions:

Long Run

A period in economic analysis during which all factors of production and costs are variable, allowing for full industry adjustment.

ATC

Average Total Cost, which is the total cost of production divided by the number of goods produced, representing the cost per unit of output.

Break-Even Point

The point where total costs equal total revenue, meaning no profit or loss is incurred.

MC

Stands for Marginal Cost, which is the cost of producing one additional unit of a good or service.