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Answer :
Answer: Procurement Department
Explanation:
Unfavorable or Adverse Variance means that actual cost is greater than standard cost. For price the procurement department is responsible for purchasing on behalf of the firm, so they are charged with the responsibility of purchasing products with the least price without compromising quality.
If they have purchased wrongly and they end up paying more that what was budgeted for then that’s unfavorable.
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Available options are:
A. Production.
B. Materials Handling.
C. Engineering.
D. Purchasing.
Answer:
D. Purchasing
Explanation:
The reason is that the price variance is because of the fact that the purchasing department didn't assessed the market conditions and as a result lost a great opportuntity to purchase the material at low price. Their might be other factors which are as under:
- Didn't took any bulk discounts
- The price of material in the market was high
- Material was short in the market
New questions in Business
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.
Which of the following statements is true?
An unfavorable materials price variance could have resulted from actions taken by the purchasing agent.
An unfavorable materials usage variance could have resulted from actions taken by the production supervisor.
An unfavorable labor usage variance could have resulted from actions taken by the personnel department.
All of the above answers are correct.