Which of the Following Changes Should Be Accounted for Using

question 152

Multiple Choice

Which of the following changes should be accounted for using the retrospective approach?

• A) A change in the estimated life of a depreciable asset.
• B) A change from straight-line to declining balance depreciation.
• C) A change to the LIFO method of costing inventories.
• D) A change in accounting for long-term construction contracts by recognizing revenue over time rather than when the contract is completed.

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Definitions:

Variable Manufacturing Overhead

The portion of manufacturing overhead costs that varies directly with the level of production, such as utility costs for machinery.

Particular Product

Refers to a specific item or product line that a company manufactures or sells.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the expected variable overhead, based on a predetermined rate.

Standard Machine-Hours

A measure of manufacturing time that is expected to be used, based on a standard rate of output per machine.