If a Company Follows a Practice of Isolating Variances at the Earliest

question 29

Multiple Choice

If a company follows a practice of isolating variances at the earliest point in time,what would be the appropriate time to isolate and recognize a direct material price variance?

• A) When material is issued.
• B) When material is purchased.
• C) When material is used in production.
• D) When production is completed.

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Definitions:

Multiplier

A factor by which an initial change in aggregate spending will alter total economic output through a series of induced spending.

Interest Rate

The amount charged, expressed as a percentage of the principal, by a lender to a borrower for the use of assets.

Crowding Out

An economic situation where private investment decreases due to an increase in government borrowing and spending.

Household Spending

This refers to the total amount of money spent by households in an economy on goods and services over a particular period of time.