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.

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Definitions:

Profit or Loss

The financial result of a company's operations, determined by subtracting total expenses from total revenues over a specific period.

Activity-Based Costing

A costing method that assigns costs to products or services based on the activities and resources that go into their production or delivery.

Cost Driver

A factor that influences or contributes to the expense incurred by a business activity. It is the root cause of why a particular cost occurs.

Conventional CVP Analysis

A method used in managerial accounting to understand the relationship between costs, production volume, and profits. It stands for Cost-Volume-Profit Analysis.