The Raw Material Variance Is Best Explained By

question 54

Multiple Choice

The raw material variance is best explained by:

• A) better use of materials by the production manager.
• B) the variance cannot be explained unless the budget is flexed to actual production.
• C) a change in price of the raw materials.
• D) the production manager failing to control the material usage.

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Definitions:

Total Cost

The complete sum of all expenses incurred in the production of goods or services, including both fixed and variable costs.

Output

the total amount of goods or services produced by a company, industry, or economy in a given period.

Average Variable Cost (AVC)

The total variable costs divided by the quantity of output produced, representing the variable cost per unit of output.

Marginal Cost Curve

A graphical representation showing how the cost of producing one more unit of a good changes as the production volume changes.