On January 1 of the Current Year, the Barton Corporation

question 139

Multiple Choice

On January 1 of the current year, the Barton Corporation issued 10% bonds with a face value of $200,000. The bonds are sold for $191,000. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, five years from now. Barton records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31 is

• A) $10,900
• B) $18,200
• C) $21,800
• D) $29,000

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Definitions:

Labour Efficiency Variance

The discrepancy between the actual hours worked and the standard hours expected to produce a certain level of output.

Variable Overhead

Costs that change in proportion with production volume or business activity levels, such as utilities or raw materials.

Labour Rate Variance

Labour rate variance is the difference between the actual hourly wage paid to workers and the standard wage rate expected, indicating variations in labor cost.

Material Quantity Variance

The difference between the actual quantity of materials used in production and the expected quantity, multiplied by the standard cost per unit.