Which of the Following Is Not True Regarding the Use

question 135

Multiple Choice

Which of the following is not true regarding the use of materials variance information?

• A) The purchasing agent has the responsibility for controlling the materials price variance.
• B) The production manager is generally responsible for materials usage.
• C) The production manager is concerned with minimizing scrap, waste, and rework.
• D) The purchasing department is responsible for acquiring quality materials.
• E) All of these are true.

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Definitions:

Contribution Margin Ratio

The percentage of each sales dollar remaining after variable costs have been subtracted, indicating how much contributes towards fixed costs and profit.

Fixed Expenses

Expenses that do not fluctuate with changes in production level or sales volume, such as lease payments, insurance, and property taxes.

Margin of Safety

The difference between actual or expected sales and the break-even sales, measured to assess the risk of incurring losses.

Contribution Margin

The amount by which sales revenue exceeds variable costs, indicating how much contributes to covering fixed costs and generating profit.