The Direct Materials Quantity Standard Should

question 196

Multiple Choice

The direct materials quantity standard should

• A) exclude unavoidable waste.
• B) exclude quality considerations.
• C) allow for normal spoilage.
• D) always be expressed as an ideal standard.

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Definitions:

Ending Finished Goods Inventory

Ending finished goods inventory is the value of all completed products that have not been sold by the end of an accounting period, ready for delivery to customers.

Raw Materials Used

The total cost of materials directly consumed in the production process during a specific period.

Gross Profit

Gross profit is the difference between sales revenue and the cost of goods sold (COGS), showing how efficiently a company produces its products.

Raw Materials Inventory

Stocks of the basic materials and components that are used in production but have not yet been processed or used in the manufacturing process.