If a Company Uses More Direct Labor Hours Than the Standard

question 142

Multiple Choice

If a company uses more direct labor hours than the standard allowed,the result is

• A)an inflated prepaid salary account on the balance sheet.
• B)an unfavorable direct labor hour variance.
• C)a favorable efficiency variance.
• D)a reduction in operating income.

Understand the differences and overlap between GAAP and International Financial Reporting Standards (IFRS) in terms of revenue recognition and measurement.

Explain the concept and implications of managing earnings, including practices such as "cookie jar reserves" and "big bath" charges.

Recognize the roles of the audit committee, internal audit staff, and the SEC in preventing and identifying accounting errors and irregularities.

Understand the significance of arrangement understanding, bill and hold basis, and up-front fees in revenue recognition.

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