According to the Internal Revenue Service, the Most Reliable Measure

question 11

Multiple Choice

According to the Internal Revenue Service, the most reliable measure of an arm's-length prices for sales of tangible property in intercompany transactions is:

• A) cost-plus method.
• B) comparable profits method.
• C) comparable uncontrolled price method.
• D) resale price method.

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Definitions:

Materials Quantity Variance

The variance between the real amount of materials utilized in manufacturing and the anticipated standard amount, times the standard unit cost.

Overhead Variance

The difference between the actual overhead costs incurred and the standard or expected overhead costs.

Direct Materials Price Variance

Direct materials price variance is the difference between the actual cost of direct materials and the standard cost, showing how much more or less was spent on purchasing materials.

Direct Labor Quantity Variance

The difference between the actual hours worked and the standard hours allowed, multiplied by the standard rate, indicating efficiency in labor usage.