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CIMAPRO19-P01-1 Exam - Topic 10 Question 82 Discussion

A company reports planning and operational variances to its managers. The following data are available concerning the price of direct material M in the last period. Material M is the only material used by the company. The company operates a just-in-time (JIT) purchasing system.Which TWO of the following statements about last period are definitely correct based on this information?The direct material price operational variance was adverse.
D) The direct material price operational variance was favourable.
A) The direct material usage operational variance was adverse.
B) The direct material price planning variance was adverse.
C) The direct material price planning variance was favourable.

CIMAPRO19-P01-1 Exam - Topic 10 Question 82 Discussion

Actual exam question for CIMA's CIMAPRO19-P01-1 exam
Question #: 82
Topic #: 10
[All CIMAPRO19-P01-1 Questions]

A company reports planning and operational variances to its managers. The following data are available concerning the price of direct material M in the last period. Material M is the only material used by the company. The company operates a just-in-time (JIT) purchasing system.

Which TWO of the following statements about last period are definitely correct based on this information?

The direct material price operational variance was adverse.

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Suggested Answer: D

by Detra at Mar 07, 2024, 06:13 PM

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Shawna
8 months ago
Seems like a tricky situation with JIT in play!
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Sol
8 months ago
I think the price planning variance was favorable.
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Vincenza
8 months ago
Wait, how can we be sure about the usage variance?
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Berry
8 months ago
Totally agree with that!
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Tijuana
9 months ago
The direct material price operational variance was adverse.
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Mariann
9 months ago
I feel like I might be mixing up the definitions of planning and operational variances. I need to be careful with my choices on this one.
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Mary
9 months ago
This question seems similar to one we practiced where we had to determine if variances were favorable or adverse based on given data. I hope I can apply that knowledge here.
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Danica
9 months ago
I think the planning variance relates to the budgeted price versus the actual price, but I'm not entirely sure how that affects the operational variance here.
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Corinne
9 months ago
I remember that operational variances are calculated based on actual performance, so if the price variance is adverse, it means we paid more than expected.
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Helene
9 months ago
I'm confident that the direct material price planning variance was adverse, since the actual price was higher than the standard price. But I'm not sure about the usage variance.
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Catina
9 months ago
Based on the data provided, I can see that the actual price of material M was higher than the standard price. So the direct material price operational variance must have been adverse.
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Eva
9 months ago
Hmm, I'm a bit confused by the concept of price and usage variances. I'll need to review my notes on that before attempting to answer.
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Van
9 months ago
Okay, let's think this through step-by-step. The key information I need to focus on is the price of the direct material M and the variances reported.
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Ludivina
10 months ago
The question is asking which TWO statements are definitely correct. I think I can rule out the usage variance being adverse, since the question doesn't provide any information about usage. So I'll focus on the price variances.
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Adaline
10 months ago
I'm a bit unsure about this one. Let me re-examine the image and definitions to see if I can figure out the right components.
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Carol
10 months ago
Okay, I've got this. The key here is to ensure the incident is properly closed out, which means confirming the root cause and the changes required. Option B is the way to go.
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Virgilio
10 months ago
I remember practice questions focused a lot on medical history and risk factors, so I want to say that assessment of work history might be the odd one out here.
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Bambi
1 year ago
I just hope the managers don't try to blame the price hikes on the intern who spilled coffee on the accounting system. That would be a real material mistake!
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Maryann
1 year ago
B) The direct material price planning variance was adverse.
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Shay
1 year ago
A) The direct material usage operational variance was adverse.
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Carey
1 year ago
This is a tough one, but I'd say the correct answers are B and D. The planning variance was adverse, and the operational variance was favorable. Unless, of course, the company's accountants are playing some sort of diabolical mind game with us. In that case, all bets are off!
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Clement
1 year ago
I agree, it's a tricky situation. We'll have to wait and see what the final report says.
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Omer
1 year ago
But I'm not so sure about the operational variance, it could go either way.
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Sheron
1 year ago
I think you're right, the planning variance was definitely adverse.
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Brande
1 year ago
I'm guessing the direct material usage operational variance was also adverse. With those price hikes, the managers are probably stressing out trying to find ways to cut costs. Maybe they could try sacrificing the interns to the accounting gods?
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Ivette
1 year ago
C) The direct material price planning variance was favourable.
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Refugia
1 year ago
I hope they figure out a solution soon. Sacrificing interns might not be the best idea.
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Desmond
1 year ago
B) The direct material price planning variance was adverse.
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Paris
1 year ago
A) The direct material usage operational variance was adverse.
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Kenneth
1 year ago
Well, the data shows the price went up, so the direct material price planning variance must have been adverse. Looks like someone's getting a stern talking-to from the higher-ups.
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Kayleigh
1 year ago
B) The direct material price planning variance was adverse.
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Chaya
1 year ago
A) The direct material usage operational variance was adverse.
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Levi
1 year ago
Hmm, let's see. Since the company operates a JIT system, I'd say the direct material price operational variance was probably favorable. Gotta love those just-in-time savings!
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Lonna
1 year ago
But the company operates a JIT purchasing system, so the price planning variance should be favourable.
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Ronny
1 year ago
I disagree, I believe the direct material price planning variance was favourable.
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Lonna
1 year ago
I think the direct material price planning variance was adverse.
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