At the End of Its First Year, the Trading Securities

question 25

Multiple Choice

At the end of its first year, the trading securities portfolio consisted of the following common stocks. $$\begin{array} { l r r } &\text {cost}&\text {fair value}\\\text { Atrium Corporation } & \$ 46,500 & \$ 50,000 \\\text { Barnes Inc. } & 60,000 & 58,000 \\\text { Cantor Corporation } & 80,000 & 76,400 \\& \underline { \$ 186,500 } & \underline { \underline { \$ 184,400 } }\end{array}$$ The unrealized loss to be recognized under the fair value method is

• A) $2,000.
• B) $5,600.
• C) $2,100.
• D) $3,600.

---

Definitions:

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the standard quantity allowed, multiplied by the standard cost per unit.

Direct Labor Rate

The rate paid for the labor time per unit of work or hour worked by an employee directly involved in production.

Cost Drivers

Factors that cause the cost of an activity or process to change, affecting the overall cost of production.

Budgets

Financial plans that estimate income and expenditures for a specific period, often used for planning and control purposes.