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minaebied minaebied
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Why is the direct materials price variance based on the quantity of materials purchased, but the direct materials quantity variance on the quantity of materials used?

▸ Production managers are only interested in the quantity purchased.

▸ Managers need to isolate variances and take corrective action as soon as possible.

▸ Managers are required by GAAP to isolate the price variance at the latest point possible.

▸ The quantity used in production is not known until units are produced.
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Managerial Accounting


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mkql12mkql12
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Managers need to isolate variances and take corrective action as soon as possible.

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