Which Assumption Is Applied When Laramie Recognizes the Operations of Its

question 64

Multiple Choice

Which assumption is applied when Laramie recognizes the operations of its wholly owned subsidiary, Big Sky, separately and distinctly from its own operations?

• A)Economic entity assumption
• B)Going concern assumption
• C)Fiscal period assumption
• D)The subsidiary stability assumption

---

Definitions:

Actual Quantity

The real amount of materials, labor, or overhead used in production or service delivery, as opposed to budgeted or standard quantities.

Standard Variable Overhead

This refers to the portion of variable overhead costs in production that varies directly with the level of production output or activity.

Actual Units Produced

The real number of units manufactured during a specific period, as opposed to planned or estimated production figures.

Standard Rate Per Hour

The standard rate per hour denotes the predetermined cost or wage rate for work performed, typically used in budgeting and payroll calculations.