Vic's At-Risk Amount in a Passive Activity Is $200,000 at the Beginning

question 3

Multiple Choice

Vic's at-risk amount in a passive activity is $200,000 at the beginning of the current year.His current loss from the activity is $80,000.Vic had no passive activity income during the year.At the end of the current year:

• A)Vic has an at-risk amount in the activity of $120,000 and a suspended passive activity loss of $80,000.
• B)Vic has an at-risk amount in the activity of $200,000 and a suspended passive activity loss of $80,000.
• C)Vic has an at-risk amount in the activity of $120,000 and no suspended passive activity loss.
• D)Vic has an at-risk amount in the activity of $200,000 and no suspended passive activity loss.
• E)None of these is correct.

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Definitions:

Labor Rate Variance

This is the difference between the actual cost of labor and the budgeted or standard cost of labor used in manufacturing.

Direct Labor-Hours

The total hours worked by employees directly involved in the production process, used for allocating labor costs to products.

Variable Manufacturing Overhead

Indirect manufacturing costs that vary with the level of production, such as utilities and materials used in the production process.

Labor Rate Variance

The difference between the actual labor cost and the standard labor cost expected for the actual production level, reflecting inefficiencies in labor use.