Which of the Following Statements Is Correct

question 5

Multiple Choice

Which of the following statements is correct?

• A) If a foreign currency weakens with respect to the Canadian dollar, both foreign operations with a functional currency that is the Canadian dollar and not the Canadian dollar, will show a foreign exchange gain.
• B) If a foreign currency weakens with respect to the Canadian dollar, both foreign operations with a functional currency that is the Canadian dollar and not the Canadian dollar, will show a foreign exchange loss.
• C) If a foreign currency weakens with respect to the Canadian dollar, a foreign operation with a functional currency that is not the Canadian dollar will show a foreign exchange gain while a foreign operation with a functional currency that is the Canadian dollar will show a foreign exchange loss.
• D) If a foreign currency weakens with respect to the Canadian dollar, a foreign operation with a functional currency that is not the Canadian dollar will show a foreign exchange loss while a foreign operation with a functional currency that is the Canadian dollar will show a foreign exchange gain.

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Definitions:

Standard Costing

Standard Costing is a cost accounting method that uses fixed overhead rates and standard costs for materials and labor to help control costs and measure performance.

Variable Overhead

Variable overhead refers to costs that vary with production levels, such as utility expenses for machinery or materials, fluctuating with the volume of output.

Labour Efficiency Variance

The difference between the actual hours worked and the standard hours allowed for the work performed, multiplied by the standard labor rate.

Labour Rate Variance

A measurement of the difference between actual labor costs and what those costs should have been according to standard rates.