For control purposes, it is usually preferable to calculate the materials price variance:
A) At point of purchase (i.e., when the materials are purchased).
B) At point of production (i.e., when the materials are issued to production).
C) At the end of the accounting period.
D) Only if the materials quantity variance is significant in amount.
E) Only if it is controllable by operating managers.

Question

Quizplus · Accepted Answer

Calculating the materials price variance at the point of purchase allows a company to immediately identify any discrepancies between the actual price paid for materials and the standard or expected price. This timely information enables the company to investigate and address any issues related to purchasing practices, supplier performance, or market price changes, facilitating better cost control and budgeting accuracy.

For Control Purposes, It Is Usually Preferable to Calculate the Materials