Costs That Vary Depending on the Amount of Inventory in Stock

question 25

Multiple Choice

Costs that vary depending on the amount of inventory in stock are known as:

• A) Ordering
• B) Holding
• C) Shortage
• D) Interest
• E) None of the above

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Definitions:

Labor Efficiency Variance

The difference between the actual hours worked and the standard hours allowed for the actual production achieved, reflecting labor efficiency.

Direct Labor-hours

Direct Labor-hours represent the total time spent by workers directly involved in the manufacturing process or providing a service.

Actual Production

The quantity of goods produced during a specific period.

Direct Labor-hours

The total time workers spend on a particular manufacturing process or project, used as a basis for assigning labor costs to products or services.