The Sum of the Price and Usage Variances Will Add

question 38

True/False

The sum of the price and usage variances will add up to the total materials variance only if the materials purchased is equal to the materials used.

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Definitions:

Job Costing

An accounting method used to track the costs associated with a specific job or project to determine its profitability.

Process Costing

A costing methodology used in manufacturing, where costs are assigned to processes or operations to calculate the cost of each unit produced.

Completed Goods

Finished products that are ready for sale.

Weighted Average Costs

A costing method that averages all costs of inventory available for sale during the period, assigning an average cost to each unit of inventory.