Processing Costs That Are Associated with Running the Inventory System

question 114

Multiple Choice

Processing costs that are associated with running the inventory system are referred to as _____ costs.

• A)carrying
• B)backorder
• C)systemic
• D)stock-keeping

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Definitions:

Standard Labor Hours

A measurement in accounting for the amount of time workers are expected to spend on tasks, typically used to plan or assess productivity.

Direct Materials Price Variance

The difference between the actual cost of direct materials purchased and the expected (standard) cost multiplied by the actual quantity purchased.

Standard Costs

Standard costs are the estimated costs associated with the production of goods or services, used as target costs to aid in budgeting and performance evaluation.

Actual Costs

The real costs that a company incurs for producing or acquiring goods or services.