Crenshaw Inc

question 67

Multiple Choice

Crenshaw Inc. had the following information related to last year's purchases: What amount would be reported as "cash outflows for purchases" on the statement of cash flows using the direct method?

• A) $527,000
• B) $493,000
• C) $475,000
• D) $457,000

---

Definitions:

Standard Cost

A predetermined cost of manufacturing, selling, or administering each product or service, used as a benchmark to measure performance.

Financial Statements

Reports that provide an overview of a company's financial condition in both short and long term, including balance sheet, income statement, and cash flow statement.

Labor Quantity Variance

Labor quantity variance measures the difference between the actual number of hours worked and the number of hours that should have been worked according to standards, multiplied by the standard hourly wage rate.

Direct Labor Hours

The total hours of work contributed by employees who are directly involved in the manufacturing process.