Additions and Improvements Are Costs Incurred to Increase the Operating

question 153

Short Answer

Additions and improvements are costs incurred to increase the operating efficiency productive capacity or expected useful life and are referred to as __________________.

---

Definitions:

Direct Materials

Raw materials that are directly used in the manufacturing of a product and can be easily traced to it.

Controllable Variance

The difference between expected and actual costs that managers have the power to influence directly.

Direct Labor Rate Variance

This refers to the difference between the actual cost of labor and the expected (or standard) cost of labor used in producing goods.

Direct Labor

The cost of wages for workers who are directly involved in the production of goods or the delivery of services.