Unfavorable Variances Occur Whenever Actual Prices or Usage Are Less

question 45

True/False

Unfavorable variances occur whenever actual prices or usage are less than standard prices or usage, and the opposite for a favorable variance.

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Definitions:

Actual Costs

Expenses that have been incurred as opposed to estimated or budgeted costs.

Work in Process

Inventory that includes raw materials, labor, and overhead costs for products that are in production but not yet complete.

Raw Materials

Basic materials and substances used in the initial stages of production or manufacturing processes.

Indirect Materials

Materials used in the production process that cannot be directly traced back to the finished product in a cost-effective manner.