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What Are the Two Theories About How Expectations Are Formed

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Essay

What are the two theories about how expectations are formed? Discuss each.


Definitions:

Materials Standards

The set specifications or benchmarks for the quality, quantity, and cost of materials used in manufacturing.

Price Variance

The difference between the actual cost of a product or service and its standard or expected cost, which can indicate issues with budgeting or pricing strategy.

Direct Materials

Raw materials that can be directly traced to the production of a specific product and are a variable cost.

Standard Cost

A predetermined cost of manufacturing a product or performing a service, used as a benchmark for measuring performance.

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