For control purposes,it is usually preferable to calculate the materials price variance:
A)At point of purchase.
B)At point of production.
C)At the end of the 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 for immediate action to be taken if there are any discrepancies between the actual price paid and the expected price. This helps control costs and prevents large variances from accumulating over time.

Option B is not the best choice as the materials price variance cannot be accurately determined until the materials are purchased.

Option C is not the best choice as it may be too late to take corrective action at the end of the period.

Option D is not relevant as the significance of the materials quantity variance does not impact the calculation of the materials price variance.

Option E is not relevant as the controllability of the variance does not impact the calculation of the materials price variance.

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