The Direct Materials Price Standard Is a Carefully Derived Estimate

question 108

True/False

The direct materials price standard is a carefully derived estimate or projected amount of what a particular type of direct material will cost when purchased during the next accounting period.

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Definitions:

Shortage Or Surplus

Economic conditions where the quantity demanded exceeds supply (shortage) or supply exceeds demand (surplus) at a given price.

Decrease In Supply

A situation where the quantity of a good or service available for sale becomes less than before, often due to factors like increased production costs, natural disasters, or reduced resources.

Equilibrium Level

The state in a market where supply equals demand, and there are no external forces causing disruption, leading to a stable price.

Unconscionable Rate

A term often used to describe exorbitantly high rates or charges that go beyond what is reasonable or legally permissible, typically in the context of loans or credit.