Direct Materials Cost That Varies with the Number of Units

question 4

True/False

Direct materials cost that varies with the number of units produced is an example of a fixed cost of production.

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Definitions:

Standard Costs

An accounting practice where predetermined costs are used for calculating the cost of production, often for budgeting and performance evaluation purposes.

Direct Materials Quantity Variance

The difference between the actual quantity of materials used in production and the standard amount expected to be used, multiplied by the standard cost per unit of material.

Actual Costs

Expenditures that a company incurs, as opposed to estimations or budgeted amounts.

Standard Costs

Predetermined costs for material, labor, and overhead used as benchmarks for measuring performance.