Often Politicians Assert That a Price, Such as the Price

question 253

Essay

Often politicians assert that a price, such as the price of gasoline or the rent for an apartment, is too high and that it is unfair for these prices to be so high. If these products are traded in competitive markets, what fairness rule are politicians using? Why?

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Definitions:

Predetermined Overhead Rate

A rate calculated by dividing estimated overhead costs by an allocation base, used to apply overhead to products or services.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the expected (or standard) quantity, measured in financial terms.

Direct Materials

These are the raw materials that are directly incorporated into a finished product.

Standard Cost Card

A document that lists the standard costs associated with producing a single unit of a product, including materials, labor, and overhead.