A Local Retail Shop Has Been Operating as a Sole

question 58

Multiple Choice

A local retail shop has been operating as a sole proprietorship.The business is growing and now the owner wants to incorporate.Which of the following is not a reason for this owner to incorporate?

• A)Ability to raise capital for expansion
• B)Desire to limit the owner's personal liability
• C)The prestige of operating as a corporation
• D)The ease in transferring shares of the corporation's stock

---

Definitions:

Variable Overhead Efficiency Variance

The difference between the actual variable overhead incurred and the standard variable overhead allocated, based on the actual input of the allocation base.

Fixed Component

A cost that does not change with the increase or decrease in the amount of goods or services produced or sold.

Predetermined Overhead Rate

An established rate used to apply manufacturing overhead costs to products, calculated in advance based on expected costs and activity levels.

Labor-Hour

A measure of work effort quantified in hours, commonly used to allocate costs or measure productivity in various contexts.