If Raw Materials Are Carried in the Materials Inventory at Standard

question 55

Multiple Choice

If raw materials are carried in the Materials Inventory at standard cost, then it is reasonable to assume that the:

• A) price variance is recognized when materials are purchased.
• B) price variance is recognized when materials are placed into production.
• C) company does not follow generally accepted accounting principles.
• D) efficiency variance is recognized when the materials are purchased.

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Definitions:

Degrees of Freedom

The number of independent values or quantities that can freely vary in the analysis of statistical calculations without violating any constraints.

Exponential Distribution

A continuous probability distribution used to model the time between events in a process with a constant rate.

Probability

The mathematical analysis of events governed by chance, quantifying how likely they are to happen.

Exponential Distribution

A probability distribution used to model the time between events in a Poisson process, characterized by a constant rate parameter.