A company's purchasing department negotiates all of the purchasing contracts for raw materials. Which variance is most useful in assessing the performance of the purchasing department?

Question

Quizplus · Accepted Answer

The materials price variance measures the difference between the actual price paid for raw materials and the budgeted or standard price. This variance is directly impacted by the performance of the purchasing department as they are responsible for negotiating the contracts for raw materials. Therefore, it is the most useful variance in assessing the performance of the purchasing department.

A Company's Purchasing Department Negotiates All of the Purchasing Contracts