The Direct Materials Price Variance Is Best Measured and Reported

question 79

Multiple Choice

The direct materials price variance is best measured and reported to appropriate management personnel at the time

• A)purchased quantities exceed standard order size.
• B)quarterly financial statements are prepared.
• C)shipments are received and recorded as purchases.
• D)direct materials are issued to production areas.

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Definitions:

Breakeven Analysis

The calculation to determine the number of products or services a business needs to sell to cover its costs, identifying the point at which revenue equals expenses.

Total Cost

The aggregate sum of all expenses associated with producing a good or providing a service, including fixed and variable costs.

Variable Costs

Expenses that vary directly with the level of production or sales volume.

Production

Use of resources, such as people and machinery, to convert materials into finished goods and services.