When Analyzing Direct Materials Price and Quantity Variances, the Responsibility

question 3

Multiple Choice

When analyzing direct materials price and quantity variances, the responsibility typically lies with

• A)controller and CFO.
• B)purchasing manager and production manager.
• C)purchasing and cost accounting manager.
• D)sales manager and production manager.

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Definitions:

Variable Cost

Expenses that vary directly with the level of production or sales volume.

Least-Squares Regression

An analytical technique that identifies the most suitable line by minimizing the sum of the squares of the gaps between the observed and estimated values.

Variable Cost

A cost that changes in proportion to the level of activity or volume of goods produced.

Fixed Cost

Expenses that do not change with the level of production or sales activities within a certain range, such as rent or salaries.