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Give at Least Three Good Reasons Why a Favourable Price

question 105

Essay

Give at least three good reasons why a favourable price variance for direct materials might be reported.


Definitions:

Total Costs

Total costs encompass the sum of all expenses incurred in the production of goods or services, including fixed and variable costs.

Average Total Costs

The total cost of production divided by the number of units produced, representing the per-unit production cost.

Marginal Costs

The charge for generating one more unit of a product or service.

Average Fixed Costs

The total fixed costs of production divided by the quantity of output produced, indicating how fixed costs change with different levels of production.

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