If materials are carried in the direct materials inventory account at standard cost, then it is reasonable to assume that the:
A) raw materials inventory account is understated.
B) price variance is recognized when materials are purchased.
C) company does not follow generally accepted accounting principles.
D) price variance is recognized when materials are placed into production.

Question

Quizplus · Accepted Answer

When materials are carried at standard cost, any difference between the actual cost and the standard cost (price variance) is typically recognized at the time of purchase.

If Materials Are Carried in the Direct Materials Inventory Account