Donald and Candice Sell Their Home for $695,000,incurring Selling Expenses

question 46

Multiple Choice

Donald and Candice sell their home for $695,000,incurring selling expenses of $30,000.They purchased the residence for $125,000 and made capital improvements totaling $20,000 during the 20 years they lived there.What is their realized gain and recognized gain on the sale?
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Realized Recognized

• A)$665,000 $20,000
• B)$520,000 $-0-
• C)$520,000 $20,000
• D)$540,000 $40,000
• E)$520,000 $270,000

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Definitions:

Predetermined Overhead Rate

An estimated overhead rate used to allocate manufacturing overhead costs to products based on a planned activity level.

Direct Labor Cost

The total cost of all the labor that is directly involved in the production of goods or services, including wages and other related expenses.

Gross Profit

The financial gain obtained after subtracting the cost of goods sold from revenue, indicating the efficiency of production and sales activities.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product.