Price Variances Show How Changes in Usage of Raw Materials

question 161

True/False

Price variances show how changes in usage of raw materials and labor affect a company's profits.

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Definitions:

Month

A unit of time, roughly based on the period of the lunar cycle, used in calendars to divide the year.

Fixed Manufacturing Overhead

The consistent, unchanged costs associated with manufacturing a product or service regardless of the output level.

Work in Process

Refers to materials that are in the process of being transformed into finished goods in a manufacturing environment.

Production

The process of creating goods and services through the combination of labor, materials, and machinery.