Under the Direct Method, Paying and Collecting Interest on Loans

question 112

Multiple Choice

Under the direct method, paying and collecting interest on loans are:

• A)financing and investing activities.
• B)operating and financing activities.
• C)operating and investing activities.
• D)operating activities.

---

Definitions:

Fixed Factory Overhead Volume Variance

A variance that measures the difference between the budgeted and actual fixed factory overhead costs, attributing changes to fluctuations in production volume.

Fixed Overhead

Costs associated with running a business that do not change with the level of production or sales, such as rent, salaries, and insurance.

Variable Overhead Rate

Variable Overhead Rate is the portion of indirect manufacturing costs that varies in proportion to production volume or activity levels, such as utilities or raw materials.

Actual Production

The real quantity of goods or services produced during a specific period, as opposed to planned or projected quantities.