Which of the Following Is True About Business Purchases

question 49

Multiple Choice

Which of the following is true about business purchases?

• A) Business purchases involve more professional purchasing effort than consumer purchases.
• B) Business purchases involve less participants in decision making compared to consumer purchases.
• C) Purchasing agents are absent in business purchases.
• D) Business purchases involve less technical and economic considerations compared to consumer purchases.
• E) Business purchases are usually quicker and more informal than are consumer purchases.

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Definitions:

Materials Price Variance

The difference between the actual cost of materials purchased and the expected (standard) cost, indicating how effectively a company controls its materials costs.

Raw Material Purchase

The process of acquiring the basic materials needed for production of goods.

Fixed Manufacturing Overhead

Fixed manufacturing overhead costs are those production expenses that do not vary with the volume of production, such as salaries of managerial staff and rent of the factory.

Budgeted Fixed Manufacturing Overhead

The predetermined amount of fixed overhead expenses expected to be incurred in the manufacturing process.