The standard price and quantity of direct materials are separated because a.GAAP and IFRS reporting requires separation b.standa
rd prices are more difficult to estimate than standard quantities c.standard quantities change more frequently than standard prices d.direct materials prices are controlled by the purchasing department and quantity used is controlled by the production department
The correct answer is letter "D": direct materials prices are controlled by the purchasing department and quantity used is controlled by the production department.
Explanation:
Standard price is the estimated price direct materials could have at the moment of ordering a purchase. Standard quantity refers to the forecasted number of units necessary for the production process of the firm. The two of them are separated to allocate each one to the department in charge of their providing accurate measures: <em>standard prices are set by the purchasing department while the standard quantity is estimated by the production department.
</em>
The efficiency of standard price and quantity relies on the purchasing and production departments separately.
<u>The government has granted the U.S. Postal Service the exclusive right to deliver mail. </u>It is not a competitive market. This situation implies that there is a unique seller, which violates the first assumption made (many buyers and sellers), and because of it the U.S Postal Service is not price taking (it can influence on prices).
<u>There are hundreds of high school students in need of algebra tutoring services in Miami. Dozens of companies offer tutoring services, and the parents who seek out tutors view the quality of the tutoring at the different companies to be largely the same</u>. It is a competitive market. There are many sellers and many buyers (students' parents) which in practice implies that all of them are price takers. The quality of classes is the same for all companies which implies that the product is homogeneous (identical product), and if tutoring companies can entry or leave the market freely if when convenient (because there is not a law that prohibits entry for example, and if there is more profitable for them they just can go to work to others states of the country), <u>all conditions are fulfilled</u>.
<u>A few major airlines account for the vast majority of air travel. Consumers view all airlines as providing basically the same service and will shop around for the lowest price.</u> It is not a competitive market. There are many buyers, but not many sellers, wich implies that companies can collude (agree on higher prices for example). Because of the magnitude of investment related to airline industries, resources are not fully mobile: it is expensive to enter and to exit this market, and that generates a natural barrier to the third principle anounced in the statement.
<u>There are hundreds of colleges that serve millions of students each year. The colleges vary by location, size, and educational quality, which enables students with diverse preferences to find schools that match their needs. </u>It is not a competitive market. The product that is commercialized is not identical (education varies by location, size, quality, etc), which means that the service is not homogeneous, therefore, one of the conditions needed is not accomplished.
Investment-grade property are properties that have a high degree of public and consumer appeal. They are properties that every institutional investors will want to have in its portfolio. The attraction of Investment-grade property may be the quality, size, location, scarcity of such in the location, proximity to valued infrastructure or public utility e.t.c. Investment grade property are more valued than those that are not graded.
