If Raw Materials Are Carried in the Direct Materials Inventory

question 5

Multiple Choice

If raw materials are carried in the Direct Materials Inventory at standard cost,then it is reasonable to assume that the:

• A) price variance is recognized when materials are purchased.
• B) price variance is recognized when materials are placed into production.
• C) company does not follow generally accepted accounting principles.
• D) efficiency variance is recognized when the materials are purchaseD.
• To be carried at standard,price variations need to be removeD.
• Standard cost for materials inventory means standard price × actual quantities in the inventory.

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Definitions:

Large Organizations

Companies or institutions with a large number of employees, complex structures, and extensive operational scopes.

Formalization

The extent to which rules, procedures, and standards guide employee behavior within an organization.

Centralization

The concentration of decision-making authority at the top levels of an organizational hierarchy.

Vertical Division

The organizational structure where tasks are divided based on hierarchy and levels of authority, creating a top-down approach.