ECONOMICS

Detailed explanation-1: -When the materials price variance is recorded at the time of purchase, raw materials are recorded as inventory at standard cost. Material price variances are often isolated at the time materials are purchased, rather than when they are placed into production, to facilitate earlier recognition of variances.

Detailed explanation-2: -In Procurement, Purchase Price Variance (PPV) is the difference between the standard price of a purchased material and its actual price. In Short, Purchase Price Variance = (Actual price – Standard price) x Quantity purchased.

Detailed explanation-3: -Material price variance is the difference between calculated forecasts of how much a material costs and how much that material costs during actual use.

Detailed explanation-4: -The materials price variance is usually the responsibility of the purchasing manager. The materials quantity and labor efficiency variances are usually the responsibility of production managers and supervisors.

Detailed explanation-5: -The materials price variance is computed by multiplying the difference between the actual price and the standard price by the actual quantity of materials used in production. 2. In general, the purchasing agent is responsible for the materials price variance.