Utah CoSold Merchandise to Big Sky Corp

question 112

Multiple Choice

Utah Co.sold merchandise to Big Sky Corp.on December 1, 2016, for $9,000, and accepted a promissory note for payment in the same amount.The note has a term of 90 days and a stated interest rate of 8%.Utah's accounting period ends on December 31.What amount should Utah recognize as interest revenue on December 31, 2016 (if a 360 day year is assumed) ?

• A) $ -0-
• B) $ 60
• C) $120
• D) $180

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Definitions:

Actual Direct Labour Hours

The real number of labor hours worked by employees directly involved in the production process, typically recorded after the work has been completed.

Standard Cost System

A cost accounting system that uses cost standards for materials, labor, and overhead to control actual costs and analyze variances.

Favourable Variance

A financial term referring to a situation where actual costs are less than budgeted costs, or actual revenues exceed budgeted revenues.

Variable Overhead Efficiency Variance

A measure of the difference between the expected variable overhead based on standard costs and the actual variable overhead incurred.