COST ACCOUNTING
STANDARD COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The Production Department should be responsible for material price variances that resulted from purchase of wrong grade of materials.
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True
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False
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Explanation:
Detailed explanation-1: -The purchase price variance is the difference between the standard and actual cost per unit of the direct materials purchased, multiplied by the standard number of units expected to be used in the production process. This variance is the responsibility of the purchasing department.
Detailed explanation-2: -In general, the production manager is responsible for the materials price variance. An unfavorable materials quantity variance occurs when the actual quantity used in production is less than the standard quantity allowed for the actual output of the period.
Detailed explanation-3: -Answer and Explanation: The production department is the one that is responsible for labor efficiency variance.
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