Security Doors Has a Standard Variable Overhead Rate of $4

question 46

Multiple Choice

Security Doors has a standard variable overhead rate of $4 per direct labour hour. The standard quantity of direct labour per unit of production is 3 hours. The company's static budget was based on 50 000 units. Actual results for the year are as follows.
What was Security Door's variable overhead efficiency variance?

• A) $45 000 favourable
• B) $60 000 favourable
• C) $45 000 unfavourable
• D) $60 000 unfavourable

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Definitions:

Perfectly Competitive

A market structure characterized by many sellers and buyers, homogeneous products, and free entry and exit, leading to price takers on both sides.

ATC Curve

A graph that shows the average total cost of producing different quantities of a good or service, calculated by dividing the total cost by the quantity produced.

Positive Economic Profit

The excess amount by which total revenue surpasses the total costs, including opportunity costs of production.

Perfectly Competitive

A market structure characterized by a large number of small firms, a homogeneous product, free entry and exit, and perfect information.