The Learning Curve Refers to Declines in the Cost of Materials

question 56

True/False

The learning curve refers to declines in the cost of materials as production volume increases.

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Definitions:

Direct Material Price Variance

The difference between the actual cost of direct materials and the standard cost multiplied by the quantity purchased, used in variance analysis for cost control.

Actual Price Per Pound

The real cost of a commodity or material expressed on a per pound basis.

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.