Multiplying the Standard Price of Direct Materials by the Standard

question 14

Multiple Choice

Multiplying the standard price of direct materials by the standard quantity for direct materials yields

• A) the direct materials price variance.
• B) the direct materials quantity variance.
• C) the standard direct materials cost.
• D) nothing; the two components should be added together.

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Definitions:

Marginal Extraction Costs

The additional costs incurred for extracting one more unit of a resource, which may increase as the resource becomes scarcer.

Resource

Assets, materials, or substances that provide economic value or benefit to individuals or businesses.

Extraction Cost

Refers to the expenses involved in removing natural resources from the earth, such as mining or drilling.

User Cost

The cost associated with using a durable asset over a period, including the depreciation of the asset and possibly other expenses like maintenance.