Team Shirts Purchased $2,000 Worth of T-Shirts from a Company

question 8

Multiple Choice

Team Shirts purchased $2,000 worth of T-shirts from a company in Guatemala.Team Shirts recorded the value of the transaction in U.S.dollars.Which accounting rule applies to this situation?

• A)monetary-unit assumption
• B)consistency
• C)relevance
• D)full-disclosure principle

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Definitions:

Variable Factory Overhead

This includes costs of factory operations that vary directly with the volume of output, such as utilities and supplies used in production.

Fixed Factory Overhead

Regular, consistent costs associated with operating a manufacturing facility that do not fluctuate with production volume.

Direct Labour

The cost of wages for workers directly involved in the manufacture of products or the delivery of services.

Fixed Manufacturing Overhead

Indirect manufacturing costs that remain constant regardless of the level of production, such as factory rent and salaries of permanent staff.