Sunny Skys,Inc

question 242

Multiple Choice

Sunny Skys,Inc.bought a derelict hunting lodge,which it tore down at a cost of $45,000 and replaced with a new lodge.The demolition cost should be:

• A) expensed .
• B) capitalized.
• C) a liability.
• D) an addition to contributed capital.

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Definitions:

Standard Quantity

This represents the expected amount of materials or inputs needed to produce a unit of product under normal conditions.

Actual Output

Actual output is the factual quantity of goods or services produced within a specified time frame, representing productivity.

Standard Price

The predetermined cost assigned to materials, labor, or overhead for the purposes of budgeting and variance analysis.

Material Price Variance

The difference between the actual cost of direct materials and the expected (standard) cost, indicating budgetary performance.