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The standard price per unit for direct materials should reflect the final, delivered cost of the materials.
Standard Price
A pre-determined cost that is often used in budgeting and financial planning, serving as a benchmark for performance evaluation.
Direct Materials
Materials that become an integral part of a finished product and whose costs can be conveniently traced to it.
Final, Delivered Cost
The comprehensive cost of a good or service including its production, logistics, and any other costs until its delivery to the final consumer.
- Understand the reasons for divergences in material and labor expenditures in the manufacturing sector.
- Identify the necessity of standards for the purpose of budgeting and analyzing variances.
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Learning Objectives
- Understand the reasons for divergences in material and labor expenditures in the manufacturing sector.
- Identify the necessity of standards for the purpose of budgeting and analyzing variances.
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