Which of the Following Is Not True Concerning Direct Materials

question 73

Multiple Choice

Which of the following is not true concerning direct materials variances?

• A) The sum of the price and usage variances will add up to the total materials variance only if the materials purchased is equal to the materials used.
• B) The materials price variance uses the actual quantity of materials purchased rather than the actual quantity of materials used.
• C) The materials price variance always uses the actual quantity of materials used rather than the actual quantity of materials purchased.
• D) The materials usage variance uses the actual quantity of materials used.
• E) Separate materials variances can be computed for each type of material used.

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Definitions:

Mixing Department

A section within a manufacturing facility where raw materials are combined or processed together to form a product or mixture.

Materials Costs

Expenses associated with the raw materials used in the production of goods, including acquisition and delivery costs.

Weighted-Average Method

An inventory costing method that assigns a cost to inventory on the basis of the weighted average of the costs of similar goods available for sale during the period.

Equivalent Units

An idea in cost accounting that involves distributing costs to goods that are partially finished, transforming them into the equivalent number of completed goods units.