If a Company Follows a Practice of Isolating Variances at the Earliest

question 80

Multiple Choice

If a company follows a practice of isolating variances at the earliest point in time,what would be the appropriate time to isolate and recognize a direct material price variance?

• A)When material is purchased
• B)When material is used in production
• C)When purchase order is originated
• D)When material is issued

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Definitions:

Job Specialization

The process of focusing one's occupational concentration on a specific area of expertise, improving efficiency and proficiency.

Departmentalization

The method of dividing an organization into distinct departments or units, each specializing in a particular function or area of operation.

Machine Bureaucracy

A highly structured, formal organization model, optimized for efficiency and characterized by a clear hierarchy, division of labor, and a focus on routine, repetitive tasks.

Simple Structure

An organizational design characterized by a low degree of departmentalization, wide spans of control, authority centralized in a single person, and little formalization.