The Method of Converting a Future Dollar Amount into Its

question 98

Multiple Choice

The method of converting a future dollar amount into its present dollar value by removing the time value of money is called ________.

• A) devaluing
• B) amortizing
• C) compounding
• D) discounting

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Definitions:

Standard Price Per Pound

A predetermined cost set for a pound of material, used in budgeting and costing to assess efficiency and variances in purchasing or production.

Total Direct Materials Cost Variance

The difference between the actual cost of direct materials used in production and the expected (or standard) cost.

Total Variable Overhead Variance

The difference between the actual variable overhead costs incurred and the expected (or budgeted) variable overhead costs.

Material Quantity Variance

A financial measurement that calculates the difference between the expected amount of materials and the actual amount used, affecting production costs and efficiency.