When Completing a Standard Costing Income Statement, Favorable Variances for Direct

question 147

True/False

When completing a standard costing income statement, favorable variances for direct materials or direct labor will go to reduce the "cost of goods sold at standard cost."

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Definitions:

Opportunity Costs

The financial impact of bypassing the alternative that ranks immediately lower in preference while making a choice.

Net Working Capital

The difference between a company's current assets and its current liabilities, indicating the short-term financial health of the business.

Accounts Receivable

Money owed to a company by its debtors for goods or services that have been delivered or used but not yet paid for.

Accounts Payable

The amount of money owed by a company to its creditors for goods and services purchased on credit, typically due within a short period of time.