With Used or Secondhand Goods, What Is Fit for Normal

question 39

Multiple Choice

With used or secondhand goods, what is fit for normal use will be:

• A) a higher standard than with new goods.
• B) a lower standard than with new goods.
• C) the same standard as with new goods.
• D) a non-applicable standard, as the goods are not new.

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Definitions:

Variable Overhead Efficiency Variance

The difference between the actual variable overhead incurred and the expected (or standard) variable overhead based on output levels.

Direct Materials Purchases Variance

The difference between the actual cost of direct materials purchased and the expected cost, based on standard prices and quantities.

Standard Costs

Predetermined or estimated costs used for budgeting and measuring performance, typically under ideal operating conditions.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the standard quantity expected to be used, based on budgeted or planned amounts.