When Consumer Spending Is Broken Down into the Major Categories

question 38

True/False

When consumer spending is broken down into the major categories of goods and services, the largest single category is spending on transportation.

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Definitions:

Excessive Inventories

A situation where a company holds more stock items than necessary, leading to increased storage costs and potential wastage.

Materials Price Variance

This measures the difference between the actual cost of materials used in production and the standard cost expected for those materials, indicating how efficiently an organization is purchasing materials.

Labor Rate Variance

The difference between the actual cost of direct labor and the expected (or standard) cost, calculated as (Actual rate - Standard rate) x Actual hours.

Standard Hourly Rate

The predetermined cost per hour for labor, used in budgeting and costing to assign labor costs to products and services.