What will the price when any purchase made in emergency?

All DiscussionCategory: QuestionsWhat will the price when any purchase made in emergency?
Devinder Gupta Staff asked 3 years ago

In case of Standard Costing, which rate is taken in case of emergency purchase, while calculating M. Price Variance?

1 Answers
CA Shushant mallik Staff answered 3 years ago

Hey, look 
In case of emergency purchase, the difference in price i.e. variance is because of Production manager, as he has not given order in time and due to which the purchase has to be done in emergency at high rate, so the same will be charged from production manager i.e. M.Usage variance not in M. Price Variance.
Ex: if the emergency purchase is done of 2000 unit @15, where as the actual units were purchased at 5000 @12, and standard price is Rs 10, then in case of M.Price Variance, it will be taken as 5000(10-12), which is the fault of Purchase Manager, and then while calculating M. Usage Variance it will be taken as (SQ-AQ)*SP+(12-15)*2000 [the excess portion, for which he is held responsible).
I guess this answer is satisfactory for you.