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Standard costing

While calculating DMUV, we use STANDARD price and not the actual price because we do not want the effect of purchase managerâ??s fault in DMUV. But while calculating DMPV, we use ACTUAL quantity consumed instead of SQAO due to which the effect of production managerâ??s fault also appears in DMPV. Why so?

Aman Mahajan

CA Inter

★ 18K+

29-Mar-21 13:44

Answers (1)

Purchase manager has purchased only the actual quantity and can be held accountable for the same. He will purchase as much as is requisitioned by the production department. His job is to ensure that actual purchases made by him is as per the standard rate.