In which of the following circumstances would it be acceptable to record the material price variance at the time of usage of the materials?
A) Where a fixed contract price is in place for the purchase of materials for a period.
B) Where the purchasing manager is held accountable for all material price variances.
C) Where the purchasing manager has little control over the price paid.
D) Both where a fixed contract price is in place for the purchase of materials for a period AND where the purchasing manager has little control over the price paid.

Question

Quizplus · Accepted Answer

If a fixed contract price is in place for the purchase of materials for a period, it would be acceptable to record the material price variance at the time of usage of the materials, as the price is already fixed for that period. Similarly, if the purchasing manager has little control over the price paid, it would also be acceptable to record the material price variance at the time of usage of the materials. In both these cases, the responsibility for the cost variance lies outside the control of the purchasing manager. However, if the purchasing manager is held accountable for all material price variances, it would not be acceptable to record the variance at the time of usage, as the manager would need to account for any fluctuations in price at the time of purchase.

In Which of the Following Circumstances Would It Be Acceptable