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

Question

Quizplus · Accepted Answer

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

If Raw Materials Are Carried in the Direct Materials Inventory