Asked by Zachary George on Jul 07, 2024
Verified
From a standpoint of cost control, the most effective time to recognize material price variances is when the materials are placed into production.
Material Price Variances
The difference between the actual cost of materials and the standard cost multiplied by the actual quantity of materials used.
Cost Control
The process of monitoring and managing the expenses of a business to adhere to a budget or increase profitability.
- Ascertain and evaluate the effects of variability elements on financial achievements.
Verified Answer
SS
Stanley SetiawanJul 14, 2024
Final Answer :
False
Explanation :
While it is important to recognize material price variances as close to the time of purchase as possible, it is actually most effective to recognize them at the time of invoice approval and payment to the supplier. This ensures that the correct amount is paid for the materials purchased, and allows for timely corrective action if necessary.
Learning Objectives
- Ascertain and evaluate the effects of variability elements on financial achievements.