A Favorable Direct Materials Cost Variance Occurs When the Actual

question 71

True/False

A favorable direct materials cost variance occurs when the actual direct materials costs incurred is less than the standard direct materials cost.

---

Definitions:

Equipment

Tangible property other than land or buildings that is used in operations of a business, such as machinery or office furniture.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the asset's consumption or wear and tear.

Statement Of Cash Flows

An accounting document illustrating the impact of adjustments in balance sheet figures and profits on cash and cash equivalents, separated into operating, investing, and financing sectors.

Indirect Method

A technique used in cash flow statements to adjust net income for changes in non-cash accounts to calculate cash flow from operating activities.