Framlingham Uses a Standard Costing System for Product Costing

question 82

Multiple Choice

Framlingham uses a standard costing system for product costing. The company uses direct labour hours as the cost driver to apply overhead costs. The following amounts were budgeted for the year:
The following were the actual results:
Calculate the variable overhead spending variance.

• A) $25 000 favourable
• B) $50 000 favourable
• C) $25 000 unfavourable
• D) $10 000 unfavourable

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Definitions:

Pollution Rights

Permits or allowances that authorize the holder to emit a certain amount of a pollutant, used in regulatory approaches to manage environmental impacts.

Supply Curve

A graphical representation of the relationship between the price of a good and the quantity of the good that suppliers are willing and able to sell.

Demand Curve

A graph showing the relationship between the price of a good and the quantity of the good that consumers are willing and able to purchase at various prices.

Externality Problem

A situation where the actions of individuals or firms result in costs or benefits to others that are not reflected in the market prices.