What Is a Significant Cost of Inflation

question 54

Multiple Choice

What is a significant cost of inflation?

• A) printing more money
• B) lower nominal interest rates
• C) unintended changes in tax liabilities
• D) higher unemployment

---

Definitions:

Standard Direct Materials

The budgeted cost for direct materials which are the raw materials that can be directly attributed to the production of goods, used for budgeting and performance evaluation.

Actual Materials Price

The real cost incurred to acquire materials used in the production process, as opposed to the budgeted or standard cost.

Standard Price

A predetermined cost assigned to materials, used for budgeting and variance analysis.

Standard Direct Materials

The predetermined cost and quantity of raw materials required for the production of a unit of product under normal conditions.