Which department would normally be responsible for the direct material price variance?

Can you have a negative coefficient in a direct variation?

Yes, you can have a negative coefficient in a direct variation. So if you had y = -7x, that would be a direct variation. If you have y = -x, I do not know, if that is what you mean. Hope it helped.

20. Which of the following standard costing variances would be least controllable by aproduction supervisor?A.Overhead volume.B.Materials usage.C . Labor efficiency.D.Overhead efficiency.

21. The variance resulting from obtaining an output different from the one expected on the basisof input is the:

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22. For the doughnuts of McDonut Co. the Purchasing Manager decided to buy 65,000 bags offlour with a quality rating two grades below that which the company normally purchased.This purchase covered about 90% of the flour requirement for the period.As to the materialvariances, what will be the likely effect?

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23. Using the two-variance method for analyzing overhead, which of the following variancescontains both variable and fixed overhead elements?

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24. Which of the following unfavorable variances is directly affected by the relative position of aproduction process on a learning curve?A.Materials mix.B.Materials price.C.Labor rate.D.Labor efficiency.

25. A manager prepared the following table by which to analyze labor costs for the month:Actual Hours atActual RateActual Hours atStandard RateStandard Hours atStandard Rate$10,000$9,800$8,820What variance was $980?

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5.The purchasing manager will generally have responsibility for materials pricevariance because they have control over the price paid for goods. However,someone other than purchasing manager could be responsible for a materialsprice variance. Production supervisors are generally responsible for labor ratevariance because labor rate variances generally arise as a result of how labor isused. The production department generally has responsibility for materialsquantity variance because they see that material usage is kept in line withstandards. However, sometimes the purchasing department may be responsiblefor an unfavorable materials quantity variance.6.The materials price variance can be computed either at the time of purchase ofdirect materials or at the time when the direct materials are used. Mostcompanies compute the materials price variance when materials are purchasedrather than when they are used in production. There are two reasons for thispractice. First, delaying the computation of the price variance until the materialsare used would result in less timely variance reports. Second, computing theprice variance when the materials are purchased allows materials to be carried inthe inventory accounts at their standard cost, which greatly simplifiesbookkeeping.

Direct Materials Price VarianceWhat is DM price variance?

In variance analysis, the total direct materials variance may be split into: price variance and quantity variance. Direct materials price variance refers to the variance that arises due to the difference in the actual and standard purchase price of raw materials used in production.

Formula and Example

The formula for direct materials price variance is:

DM price variance = (AP - SP) x AQ

where: AP = actual price, SP = standard price, and AQ = actual quantity.

Example: Based on market quotes, XYZ Company has established a standard price of $5 per kilogram of raw material. Each unit of its product requires 2 kgs. Last month, XYZ used 20,000 kgs. of raw material costing $105,000 to produce 9,600 units. Compute for the direct materials price variance.

If actual price is greater than standard price, the variance is unfavorable since the company paid more than what it has set. If actual price is less than standard price, the variance is favorable.

Analyzing a Favorable DM Price Variance

A favorable DM price variance occurs when the actual price paid for raw materials is less than the estimated standard price. It could mean that the firm's purchasing department was able to negotiate or find materials with lower cost. This is generally favorable to the company; however, further analysis is needed since lower price is often attributed to lower quality. Lower quality of materials results to lower quality of finished products, or excessive use of materials (resulting to an unfavorable DM quantity variance).

Also, a higher standard price may simply mean that the general prices in the industry have fallen and that the standard needs to be revised.

Analyzing an Unfavorable DM Price Variance

The DM price variance is unfavorable if the actual price of the materials is higher than the standard price. The purchasing department bought materials that cost too much. While this is usually treated as undesirable, higher actual prices may simply indicate a normal rise of prices in the industry. In such case, the standard price needs to be revised.

Who Has Responsibility over DM Price Variance?

Generally, the purchasing department of the company is responsible for direct materials price variance since it has control over the acquisition of materials, including the selection of suppliers.

Web link

APA format

Direct Materials Price Variance - Accounting Dictionary (2022). Accountingverse.
https://www.accountingverse.com/dictionary/d/direct-materials-price-variance.html

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Who would be responsible for a company's materials price variance?

Who is responsible for material variances?

Who would most likely be held responsible for controlling the materials price variance?