Which of the Following Is an Argument Against Using Historical

question 128

Multiple Choice

Which of the following is an argument against using historical cost in accounting?

• A) Fair values are more relevant.
• B) Historical costs are based on an exchange transaction.
• C) Historical costs are reliable.
• D) Fair values are subjective.

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Definitions:

Materials Quantity Variance

Materials Quantity Variance is the difference between the expected amount of materials to produce a given output and the actual amount of materials used, highlighting efficiency in material usage.

Variable Overhead

Expenses that vary with production volume, such as utility costs in a factory.

Standard Costs

Predetermined or estimated costs for a product or service, used for budgeting purposes and as a benchmark for measuring performance.

Materials Price Variance

A measure of the difference between the actual cost of materials and the expected cost, based on the standard price.