The Sum of the Price and Usage Variances Will Add

question 38

True/False

The sum of the price and usage variances will add up to the total materials variance only if the materials purchased is equal to the materials used.

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Definitions:

Bullwhip Effect

Erratic shifts in orders up and down the supply chain.

Information Flows

The movement or exchange of information within an organization or between entities, facilitating decision-making and operations.

Shipments

The process of transporting goods from one location to another.

Bullwhip Effect

The phenomenon in supply chain management where small fluctuations in demand at the retail level cause increasingly larger fluctuations in demand at the wholesale, distributor, and manufacturer levels.