Tom and Jean Are Husband and Wife and Live in California.In

question 106

Multiple Choice

Tom and Jean are husband and wife and live in California.In 1991,they use $400,000 of community funds to purchase an annuity from an insurance company.Under the terms of the contract,Tom is to receive $40,000 per year for life once he reaches age 65.If Jean outlives Tom,she is to receive $30,000 per year for life.Tom dies first (and before reaching age 65) .At this time,the value of Jean's interest is $500,000.As to this contract,Tom's gross estate includes:

• A)$0.
• B)$200,000.
• C)$250,000.
• D)$500,000.
• E)None of the above.

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Definitions:

Direct Labor Rate Variance

The cost associated with the difference between the actual rate and the standard rate paid for direct labor multiplied by the actual direct labor hours used in producing a commodity.

Actual Costs

The true amount of money spent on a project or activity, as opposed to estimated or budgeted costs.

Standard Costs

Standard costs are predetermined estimates of the cost to manufacture a single unit or a number of units of a product during a specific time period.

Variance Standard

A method used in budgeting and accounting to analyze the difference between planned financial outcomes and actual results.