If a company follows a practice of isolating variances at the earliest point in time,what would be the appropriate time to isolate and recognize a direct material price variance?

Question

Quizplus · Accepted Answer

Isolating the direct material price variance at the time of purchase would allow for timely identification and correction of any pricing errors or discrepancies. This would also enable the company to make adjustments to their purchasing practices or negotiate better prices with suppliers. Waiting until the material is used in production or issued could result in a delay in identifying the variance and addressing the underlying issue. The purchase order origination may also be too early in the process to accurately determine the price variance.

If a Company Follows a Practice of Isolating Variances at the Earliest