Question

The purchasing agent of the Clampett Company ordered materials of lower quality in an effort to economize on price and in response to the demands of the production manager due to a mistake in production scheduling. The materials were shipped by airfreight at a rate higher than that ordinarily charged for shipment by truck, resulting in an unfavorable materials price variance. The lower quality material proved to be unsuitable on the production line and resulted in excessive waste. In this situation, who should be held responsible for the materials price and quantity variances?

Answer 1

Answer:

The correct answer is: Materials Price Variance: Production Manager

Materials Quantity Variance: Purchasing Agent

Explanation:

The production manager had to buy the materials that are commonly used, as this is an item of great importance in the process of converting the materials, since otherwise there is a risk of becoming waste due to their quality. In the case of the variation presented, each manager or person in charge of the area must supervise that the measurements are well calculated, and that the aspects related to the direct process must be effectively ensured for the good of the operation.