Marlin Enterprises Signed a Lease for Office Space During Their

question 18

Multiple Choice

Marlin Enterprises signed a lease for office space during their first month of business.At that time they paid a total of $12,000 for first and last months' rent.At the end of the first month,the effect on the financial statements would be

• A)$12,000 rent expense.
• B)$6,000 rent expense and $6,000 prepaid rent on the Statement of Financial Position.
• C)$12,000 prepaid rent on the Statement of Financial Position.
• D)Nothing recorded because the company has not made any sales yet.

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Definitions:

Labour Efficiency Variance

A measure used in cost accounting to determine the difference between the actual hours worked and the standard hours planned for a task, multiplied by the standard labor rate.

Variable Overhead Efficiency Variance

A metric that measures the difference between the actual variable overhead cost incurred and the standard cost expected for the actual production level.

Variable Overhead Efficiency Variance

A measure in managerial accounting that evaluates the efficiency of variable overhead resource utilization by comparing the actual hours worked to the standard hours allowed for the actual production achieved.

Standard Costing

An accounting method that assigns predetermined costs to cost units, used to control costs and measure performance.