What Are Two Key Concepts to Remember If You Are

question 37

Essay

What are two key concepts to remember if you are thinking of borrowing money or opening a credit account? Describe each concept.

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Definitions:

Standard Quantity

The predetermined or expected amount of materials required to complete one unit of a product, used for budgeting and costing purposes.

Standard Price

The predetermined cost that a company expects to pay for goods and services; used in budgeting and cost control.

Actual Materials

The real quantity and cost of materials used in the production process, as opposed to estimated or standard materials.

Material Price Variance

The difference between the actual cost of direct materials used in production and the standard cost of those materials.