The RBD Partnership Balance Sheet on August 31 of the Current

question 35

Multiple Choice

The RBD Partnership balance sheet on August 31 of the current year is as follows:

On that date,Rachel sells her one-third partnership interest to Bill for $300,000,including cash and relief of Rachel's share of the nonrecourse debt.The nonrecourse debt is shared equally among the partners.Rachel's outside basis for her partnership interest is $250,000.How much capital gain and/or ordinary income will Rachel recognize on the sale?

• A)$20,000 capital gain; $30,000 ordinary income.
• B)$30,000 capital gain; $20,000 ordinary income.
• C)$50,000 capital gain; $0 ordinary income.
• D)$0 capital gain; $50,000 ordinary income.
• E)None of the above.

Calculate the total variable manufacturing cost per unit.

Apply cost estimation techniques to administrative expenses and utilities.

Understand and apply the high-low method to analyze cost behavior.

Understand and apply the least-squares regression method to analyze cost behavior.

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Definitions:

Activity Variance

The difference between the planned activity level of cost-driving activities and the actual level incurred, impacting the budget or costing analysis.

Materials

Items or substances used in the production or manufacturing of goods.

Personnel Expenses

Costs associated with employing personnel, including wages, benefits, training, and other related expenses.

Spending Variance

A metric that compares the actual cost of production against the budgeted or standard cost, highlighting over or under spending.