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The Downward Demand Spiral for a Company Is the Continuing

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The downward demand spiral for a company is the continuing reduction in the demand for its products that occurs when prices of competitors' products are not met and higher unit costs result in more reluctance to meet competitors' prices.


Definitions:

Material Variance

Material variance is the difference between the actual cost of materials used in the production process and the expected (or standard) cost, used to analyze and control costs in manufacturing.

Standard Cost

Standard cost is an estimated or predetermined cost of performing an operation, producing a good, or delivering a service, under normal conditions, used for budgeting and assessing performance.

Materials Price Variance

The difference between the actual cost and the standard cost of materials multiplied by the quantity purchased.

Raw Materials

Basic materials and substances used in the initial stages of production to create goods and products.

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