Expenses That Are Incurred Directly or Entirely in Connection with the Sale

question 3

Multiple Choice

Expenses that are incurred directly or entirely in connection with the sale of merchandise are classified as

• A) selling expenses
• B) general expenses
• C) other expenses
• D) administrative expenses

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Definitions:

Direct Materials Purchases Variance

The difference between the actual cost of direct materials purchased and the expected cost of direct materials, based on standard cost.

Standard Direct Labor-Hours

The predetermined amount of labor time estimated or expected to produce a unit of output, used for budgeting and measuring efficiency.

Labor Rate Variance

The difference between the actual cost of labor and the budgeted or standard cost of labor.

Direct Materials Purchases Variance

Direct materials purchases variance analyzes the difference between the actual cost of materials purchased and the budgeted cost, impacting budgeting and cost control.