If a company recognizes variances at the earliest point possible, raw materials inventory will be debited for the actual quantity of raw materials purchased and costed at the actual price paid per unit.

Question

Quizplus · Accepted Answer

When variances are recognized at the earliest point possible, raw materials inventory is debited for the standard cost, not the actual cost. The variances are recorded separately to reflect the difference between actual and standard costs.

If a Company Recognizes Variances at the Earliest Point Possible