Totals Are Determined by Rounding to Tenths

question 37

Multiple Choice

Totals are determined by rounding to tenths. Identify the potential error as random or systematic.

• A) Random
• B) Systematic

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Definitions:

Standard Material

The predetermined quantity and cost of materials expected to be used in producing a unit of product, used as a benchmark for cost control.

Materials Price Variance

The difference between the actual cost of materials and the expected (standard) cost of materials used in production.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the expected quantity, which can affect costs.

Actual Price

The real price at which a transaction occurs, as opposed to an estimated or listed price.