The Direct Materials Usage Ratio for a Given Period Is

question 67

Multiple Choice

The direct materials usage ratio for a given period is:

• A) Defined as the ratio of quantity purchased to quantity used.
• B) Defined as the inverse of the materials quantity variance for the period.
• C) Entered into its own variance account at the end of the period.
• D) A useful indicator of performance by the manufacturing department.
• E) A useful indicator of performance of the purchasing department.

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Definitions:

Fair Value

The estimated market value of an asset, liability, or financial instrument at a given point in time.

Goodwill Impairment

A decrease in the value of a company's goodwill asset, indicating that the value of an acquired company's brand, customer base, or proprietary technology has declined.

Depreciation Expense

The allocation of the cost of a tangible asset over its estimated useful life to account for wear and tear, obsolescence, or decay.

Coupon Rate

The interest rate that a bond issuer will pay to a bondholder.