If You Double the Principal Repayment Called for on Your

question 80

Multiple Choice

If you double the principal repayment called for on your car loan each month without doubling the interest payment, you will

• A) reduce the term of the loan by half.
• B) reduce the amount of interest you pay by about 30%.
• C) not have much effect since you are not also doubling the interest paid monthly.
• D) Both A and B are correct.

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Definitions:

Price Variance

A measurement of the difference between the actual cost of a good or service and its expected cost.

Quantity Variance

The difference between the expected and actual quantities used or produced in a process.

Total Cost Variance

The difference between the actual cost and the standard cost of an operation, process, or product.

Direct Materials Price

The cost of raw materials and components required to produce a finished product.