The Sum of the Material Price Variance and the Material

question 161

True/False

The sum of the material price variance and the material usage variance will add up to the total materials variance even if the materials purchased are NOT equal to the materials used.

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Definitions:

Cost Formula

A mathematical equation used to predict the total cost of production or operations, incorporating both fixed and variable costs.

Total Cost

Encompasses all expenses associated with producing or acquiring goods and services, including direct, indirect, fixed, and variable costs.

Activity Level

The volume of production or the degree of services provided, which impacts the variable costs and sometimes the efficiency in a business.

Fixed Manufacturing

Costs in manufacturing that do not vary with the level of production, such as rent, salaries, and insurance.