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.
To be carried at standard,price variations need to be removeD.
Standard cost for materials inventory means standard price × actual quantities in the inventory.

Question

Quizplus · Accepted Answer

Price variance is recognized when materials are purchased because the standard cost system records materials at standard cost, and any difference between the actual purchase price and the standard cost is recognized as a variance at the time of purchase.

If Raw Materials Are Carried in the Direct Materials Inventory