The materials price variance is generally calculated at the time materials are purchased because:

• A. the actual purchase price is known at that time.
• B. the quantity of materials used in production is always equal to the quantity purchased.
• C. it is required by generally accepted accounting principles (GAAP) to record variances immediately.
• D. supplies are always consumed immediately upon purchase.

Answer: (A)

Verified step by step guidance

1. Understand the concept of materials price variance: It measures the difference between the actual cost of materials purchased and the standard cost of those materials, multiplied by the quantity purchased.
2. Recognize that the actual purchase price is known at the time of purchase, which allows for the calculation of the variance immediately.
3. Clarify that the quantity of materials used in production may not always equal the quantity purchased, as materials can be stored for future use.
4. Note that generally accepted accounting principles (GAAP) do not mandate the immediate recording of variances; this is a managerial accounting practice rather than a financial accounting requirement.
5. Understand that supplies are not always consumed immediately upon purchase, as businesses often maintain inventory for future use, making this option incorrect.