The Basic Motives for Capital Expenditures Are to Expand Operations

question 9

True/False

The basic motives for capital expenditures are to expand operations, to replace or renew fixed assets, or to obtain some other, less tangible benefit over a long period.

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Definitions:

Direct Materials Quantity Variance

The difference between the actual quantity of materials used in production and the expected quantity, multiplied by the standard cost per unit.

Price Variance

The difference between the expected price and the actual price paid for an item.

Factory Overhead Volume Variance

The difference between the budgeted and actual overhead costs due to variations in the volume of production.

Direct Labor Rate Variance

The difference between the actual cost of direct labor and the expected (or standard) cost, based on the hours actually worked.