The Materials Price Variance Is Computed Using the Actual Quantity

question 15

True/False

The materials price variance is computed using the actual quantity of materials used, and the materials usage variance is computed using the actual quantity of materials purchased.

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Definitions:

Variable Expenses

Costs that change in proportion to the level of activity or volume of output in a business.

Fixed Expenses

Costs that do not change in total regardless of the level of production or sales activity, such as rent and salaries.

Net Income

The total profit or loss of a company after all expenses, including taxes and operating costs, have been subtracted from revenues.

Break-Even Point

The point at which total cost and total revenue are equal, meaning there is no profit or loss.