Direct Material Costs Do Not Include Small Items That It

question 33

Multiple Choice

Direct material costs do not include small items that it is uneconomical to trace to products. Which of the following would not be included as a direct materials cost for a furniture manufacturer?

• A) Wood
• B) Materials
• C) Glue
• D) Handles

---

Definitions:

Operating Standard

A benchmark or set of guidelines used to ensure products or services meet a certain level of quality or efficiency in their production or delivery.

Materials Price Variance

The difference between the actual cost of materials and the standard cost, multiplied by the quantity of materials purchased, indicating cost management efficiency.

Purchasing Department

The division of a business responsible for acquiring goods, services, and materials necessary for the company’s operations.

Labour Rate Variance

The difference between the actual cost of labor per hour and the standard cost of labor per hour, multiplied by the number of hours worked.