If a company recognizes variances at the earliest point possible, raw materials inventory will be debited for the Actual Quantity (AQ)of raw materials purchased and costed at the Actual Price (AP)paid per unit.

Question

Quizplus · Accepted Answer

When a company recognizes variances at the earliest point possible, the raw materials inventory is debited for the Actual Quantity (AQ) of raw materials purchased but at the Standard Price (SP) per unit, not the Actual Price (AP) paid. Variances are recorded separately.

If a Company Recognizes Variances at the Earliest Point Possible