A company that records the direct materials price variance at the time of purchase will record the use of direct materials (measured in kilograms) in the production process by crediting raw materials inventory for which of the following?

Question

Quizplus · Accepted Answer

When a company records the direct materials price variance at the time of purchase, it means that the actual cost of materials is recognized immediately. The use of direct materials in production is then recorded by crediting raw materials inventory at the standard cost for the actual quantity of materials put into production. This approach isolates the price variance at the time of purchase and uses standard costing for tracking the usage of materials in production.

A Company That Records the Direct Materials Price Variance at the Time