A variance arising in a standard costing system that indicates the difference between the actual cost of direct materials and the standard cost of direct materials. Recognizing this variance at the time the direct materials are put into the direct or raw materials inventory is preferred over recognizing the variance at the time the materials are placed into production (work-in-process). To learn more, see Explanation of Standard Costing.
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For the past 52 years, Harold Averkamp (CPA, MBA) has
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