Answer:
Likely to occur during economic growth and increase the trade deficit.
1. Domestic private investment increases
2. Imports increase
When there is a period of economic growth, people generally have more income in the economy. Their consumption will increase and they will demand more foreign goods as well as domestic. This will lead to imports rising.
Likely to occur during economic growth and decrease the trade deficit.
1. Private saving increase.
2. Government borrowing decrease
With people earning more income, they will be able to save more of that income and because they are not buying with those savings, trade deficit drops.
The government would also not have to borrow as much to prop up the economy as the economy is also doing well. This means less need for foreign funds so a lower trade deficit ensues.
Not likely to occur during economic growth.
1. Imports decrease.
2. Government borrowing increases.
When there is economic growth, it is unusual to see that imports are decreasing.
Government would also not have to borrow as much as the economy is doing well on its own and does not need the government to pump money into it.
Answer:
1. $176,000
2. $192,500
Explanation:
1. Cost of direct materials used = $ 43,000 + $ 188,000 - $ 43,000 = $ 188,000 - $ 12,000 = $176,000
2. Cost of direct labor used = $ 250,000 - $57,500 = $192,500
Favorable variance is the variance causes operating income to be greater than the budgeted operating income.
A favorable variance is wherein real income is greater than budget, or real expenditure is less than budget. That is similar to a surplus in which expenditure is much less than the available earnings.
Is Favorable variance usually accurate?
Favorable variances are defined as either generating greater revenue than expected or incurring fewer fees than expected. Damaging variances are the other. Much less revenue is generated or greater prices incurred. Either may be correct or terrible, as these variances are based on a budgeted amount.
How do you inform if a variance is favorable variance or destructive?
If sales have been better than expected, or expenses were decrease, the variance is favorable variance. If sales have been decrease than budgeted or costs were better, the variance is detrimental.
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