The Following Is an Extract from a Budgetary Control Report

question 11

Multiple Choice

The following is an extract from a budgetary control report for the latest period: 11ec37eb_8bae_9833_97b9_1fd3c29e0753__00 The budget variance for prime cost is:

• A) $3,260 adverse
• B) $18,580 adverse
• C) $3,340 adverse
• D) $3,260 favourable

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Definitions:

Purchases Account

A ledger account in which the total amount of goods purchased during a period is recorded.

Current Cost Accounting System

An accounting approach that records assets and liabilities at their current market value instead of their historical cost.

Unrealized Holding Gains

Increases in the value of assets that an entity holds but has not yet sold, and thus are not reflected in the income statement until sold.

Absorption Costing

A costing method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.