Direct Materials Variances Are Called Price and Quantity Variances

question 158

Short Answer

Direct materials variances are called price and quantity variances. However, when referring to direct labor, these variances are usually called ________and ___________variances.

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Definitions:

Payback Period

The duration of time it takes for an investment to generate enough revenue to recover the initial cost of the investment.

Profitability Index

A measure used in capital budgeting to evaluate the profitability of an investment, calculated as the present value of future cash flows divided by the initial investment cost.

Discount Rate

The interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve's discount window.