Multiplying the Standard Price of Direct Materials by the Standard

question 14

Multiple Choice

Multiplying the standard price of direct materials by the standard quantity for direct materials yields

• A) the direct materials price variance.
• B) the direct materials quantity variance.
• C) the standard direct materials cost.
• D) nothing; the two components should be added together.

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Definitions:

Accounts Receivable

Unpaid dues from customers to a company for goods or services already delivered.

Zero Balance Accounts

A checking account in which a balance of zero is maintained by automatically transferring funds from a master account in an amount only large enough to cover checks presented.

Excess Funds

Surplus money available with an entity after all expenses and obligations have been met, which can be invested or saved for future use.

Ordering Costs

Expenses incurred in placing and receiving orders from suppliers, typically including costs related to processing, shipping, and receiving.