Avatar Company Uses the Direct Method to Prepare Its Statement

question 81

Multiple Choice

Avatar Company uses the direct method to prepare its statement of cash flows. Refer to the following information reported for the year 2015: 1) Sales Revenue, $515,000
2) Accounts Receivable, beginning balance, $92,000
"3) Accounts Receivable, ending balance, $57,000
In the operating activities section of the statement of cash flows, what amount will be shown for collections from customers?"

• A)$550,000
• B)$458,000
• C)$149,000
• D)$366,000

---

Definitions:

Material Price Variances

The difference between the expected cost of materials and the actual cost incurred, useful in budgeting and cost management.

Labor Efficiency Variance

A measure used in cost accounting to gauge the difference between the actual hours taken to produce a good or service and the standard hours expected, multiplied by the standard labor rate.

Labor Rate Variance

The difference between the actual cost of labor and its expected cost, based on standard rates and hours.

Standard Hours Allowed

The predetermined amount of time expected to be required to complete a unit of work, used as a benchmark in costing and efficiency analysis.