A Cost Variance Equals the Sum of the Quantity Variance

question 149

True/False

A cost variance equals the sum of the quantity variance and the price variance.

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Definitions:

Capital Equipment

Long-term assets acquired or used by a business for the production of goods and services, such as machinery, buildings, and vehicles.

Market Price

The current price at which an asset or service can be bought or sold in a given market, determined by supply and demand.

Equilibrium Quantity

The amount of a good or service that is supplied and demanded at the equilibrium market price.

Marginal Product

The additional output resulting from the use of one more unit of a factor of production.