Which of the Following Principles Best Describes the Conceptual Rationale

question 3

Multiple Choice

Which of the following principles best describes the conceptual rationale for the methods of matching depreciation expense with revenues?

• A) Systematic and rational allocation
• B) Immediate recognition
• C) The process of charging the decline in value of an economic resource to income in the period in which the benefit occurred.
• D) The process of allocating the cost of tangible assets to expense in a systematic and rational manner to those periods expected to benefit from the use of the asset.

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Definitions:

Direct Labor Rate Variance

The difference between the actual cost of direct labor and the standard cost, attributed to the difference in the hourly wage rate paid and the standard rate expected.

Direct Labor Costs

These are the salaries and wages paid to employees directly involved in producing a company's goods or services.

Controllable Variance

Controllable variance refers to the difference between actual and expected figures that can be influenced by the actions of managers.

Overhead Costs

General expenses related to the operation of a business that are not directly attributed to creating a product or service.