Why material price variance extracted at time of purchase?

Material price variance is calculated at the time of purchase to assess the difference between the actual cost of materials and the standard cost set by the organization. This variance helps in identifying discrepancies in pricing and allows for timely adjustments in Budgeting and Forecasting. Analyzing price variances at the point of purchase also aids in evaluating supplier performance and making informed procurement decisions. By monitoring these variances, companies can manage costs more effectively and improve overall financial performance.