The Statement That Is True with Respect to Current Cost

question 6

Multiple Choice

The statement that is true with respect to current cost accounting is:

• A)Gains are recorded only when the assets are disposed of
• B)Holding gains are not included in current operating profits
• C)Current operating profit is the excess of the current value of the output sold over the current cost of the related inputs
• D)None of the above is true

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Definitions:

Direct Labor Rate Variance

The difference between the actual cost of direct labor and the expected (or standard) cost, used as a measure of performance in variance analysis.

Actual Rate

The actual interest rate or return that is earned or paid on an investment, loan, or other financial product.

Standard Rate

A predetermined or fixed cost rate that is applied uniformly across units, activities, or time for budgeting or billing purposes.

Unfavorable Cost Variance

A variance that occurs when the actual cost exceeds the standard cost.