The most useful inventory costing method which enables purchase price variance analysis is:
Correct Answer: B
Standard costing involves assigning expected costs to products, including materials, labor, and overhead. This method allows companies to set cost standards and then analyze variances between the actual costs and the standard costs. Purchase price variance analysis specifically examines the differences between the actual price paid for materials and the standard price. This variance analysis is crucial for identifying cost-saving opportunities and managing purchasing performance. Other costing methods like average costing, LIFO, and FIFO do not provide the same level of detail for analyzing purchase price variances. References:
* Horngren, C. T., Datar, S. M., & Rajan, M. V. (2015). Cost Accounting: A Managerial Emphasis.
Pearson.
* Blocher, E. J., Stout, D. E., & Cokins, G. (2018). Cost Management: A Strategic Emphasis.
McGraw-Hill Education.