The Depreciation Method Chosen for Financial Reporting Purposes (GAAP)must Also

question 120

True/False

The depreciation method chosen for financial reporting purposes (GAAP)must also be utilized for income tax reporting (IRS).

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Definitions:

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the standard quantity allowed for the actual output, multiplied by the standard price per unit of materials.

Standard Quantity

The predetermined or budgeted amount of materials expected to be used in the production of a product, based on efficiency and productivity standards.

Variable Overhead Efficiency Variance

The difference between the actual hours taken to produce a good and the standard hours expected, multiplied by the variable overhead rate.

Excessive Inventories

A situation where a company holds more stock items than necessary, leading to increased storage costs and potential wastage.