A Characteristic of a Perpetual Inventory Method Is

question 36

Multiple Choice

A characteristic of a perpetual inventory method is:

• A)it keeps continual track of inventory.
• B)it records units on hand at the beginning of the period.
• C)it records units sold immediately.
• D)All of these answers are correct.

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Definitions:

Labor Efficiency Variance

The difference between the actual hours of labor worked and the expected (or standard) hours, multiplied by the standard hourly labor rate.

Direct Labor

The cost of wage-earning employees who are directly involved in the production of goods or services, such as assembly line workers.

Direct Labor Rate Variance

The difference between the actual cost of direct labor and the standard cost, demonstrating how actual labor costs differ from budgeted amounts.

Materials Price Variance

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