Why Is the Direct Materials Price Variance Based on the Quantity

question 102

Multiple Choice

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?

• A)Managers need to isolate variances and take corrective action as soon as possible.
• B)Production managers are only interested in the quantity purchased.
• C)The quantity used in production is not known until units are produced.
• D)Managers are required by GAAP to isolate the price variance at the latest point possible.

---

Definitions:

Systematists

Scientists who study the diversity of life and the evolutionary relationships between organisms, classifying them into a systematic framework.

Probability

A measure of the likelihood of a particular event or outcome occurring, expressed as a number between 0 and 1.

Lentivirus

Lentivirus is a genus of retroviruses associated with long incubation periods, known to infect host cells and integrate into their DNA, including human immunodeficiency virus (HIV).

Retrovirus

An RNA virus that uses reverse transcriptase to produce a DNA intermediate, known as a DNA provirus, in the host cell. See DNA provirus.