Question

A company wishing to isolate variances at the point closest to the point of responsibility will determine its material price variances when

a. material is purchased
b. material is issued to production
c. material is used in production
d. production is completed

Answer 1

A company determines its material price variances when material is purchased, issued to production, used in production, or production is completed.

Step-by-step explanation:

The company wishing to isolate variances at the point closest to the point of responsibility will determine its material price variances when:

1. Material is purchased: The company can compare the actual purchase price of the materials with the standard price to calculate the material price variance.
2. Material is issued to production: This step involves comparing the actual price at which the materials were issued to production with the standard price to find the material price variance.
3. Material is used in production: Here, the company can compare the actual usage price of the materials with the standard price to calculate the material price variance.
4. Production is completed: The material price variance can also be determined by comparing the actual price of materials used in production with the standard price when the production is completed.