Refer to Scenario 7

question 2

Multiple Choice

Refer to Scenario 7.2 below to answer the question(s) that follow.
SCENARIO 7.2: You are the owner and only employee of a company that sets odds for sporting events. Last year you earned a total revenue of $100,000. Your costs for rent and supplies were $50,000. To start this business you invested an amount of your own capital that could pay you a return of $20,000 a year.
-Refer to Scenario 7.2. During the year your economic costs were

• A) $70,000.
• B) $60,000.
• C) $50,000.
• D) $20,000.

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Definitions:

Direct Labor Standards

Direct labor standards are predetermined measures for the amount of labor time and cost that should be associated with producing a unit of product or performing a service.

Standard Cost Variances

The differences between the actual costs and the standard costs for manufacturing or service processes, used to control and manage expenses.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including material and labor costs.

Retained Earnings

The portion of net income that is kept by a company rather than distributed to its shareholders as dividends, often used for reinvestment.