The Materials Price Variance Should Be Computed

question 98

Multiple Choice

The materials price variance should be computed:

• A) when materials are purchased.
• B) when materials are used in production.
• C) based upon the amount of materials used in production when only a portion of materials purchased is actually used.
• D) based upon the difference between the actual quantity of inputs and the standard quantity allowed for output times the standard price.

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Definitions:

Supervisory Wages

Compensation paid to employees responsible for overseeing and directing workers or production.

Processing Batches

The grouping of similar items or transactions for processing at the same time to increase efficiency.

Direct Materials Cost

The expense associated with raw materials that are directly incorporated into a finished product.

Activity-Based Costing

A costing method that assigns overhead and indirect costs to specific activities, providing more accurate product or service costing.