COST PRINCIPLE Definition

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COST PRINCIPLE is the principle where a company is obliged to record its fixed assets at their actual purchase price or production cost.

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FAVORABLE VARIANCE is a variance created by using or spending less of a given resource than specified by the standard, often categorized as rate (spending less per hour for labor for a given amount of production), efficiency (using less hours for a given amount of production), usage (using less materials for a given amount of production) or price (paying less to a vendor for a given purchased item).

OFFER PRICE see ASK PRICE.

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