In what sense can a variable cost be considered constant?
The variable cost per unit always remains constant for all output levels.
The term cost refers to the expenses incurred by a business to produce goods or services. Effective planning and efficient decision-making costs are divided into variable and fixed costs for better understanding.
The variable cost per unit is considered constant because it remains unaffected by the production level. The variable cost per unit remains constant for all production output levels.
Hence, it is the only case when the variable cost per unit remains unchanged for all the production levels.
Resset Co. provides the following results of April’s operations: F indicates favorable and U indicates unfavorable. Applying the management by exception approach, which variances are of greatest concern? Why?
Direct materials price variance
Direct materials quantity variance
Direct labor rate variance
Direct labor efficiency variance
Controllable overhead variance
Fixed overhead volume variance
Tercer reports the following for one of its products. Compute the total direct materials cost variance and classify it as favorable or unfavorable.
Direct materials standard (4 lbs. @ $2 per lb.) $8 per finished unit
Actual finished units produced 60,000 units
Actual cost of direct materials used $535,000
Frontera Company’s output for the current period results in a $20,000 unfavorable direct labor rate variance and a $10,000 unfavorable direct labor efficiency variance. Production for the current period was assigned a $400,000 standard direct labor cost. What is the actual total direct labor cost for the current period?
94% of StudySmarter users get better grades.Sign up for free