Consider the following set of circumstances for a business:
SQ SP AQ SP AQ SP AQ AP
$1,500,000 $1,450,000 $1,375,000 $1,525,000
MPV = Unfavorable $150,000
MQV = Favorable $50,000
SQ SR AQ SR AQ AR
$2,650,000 $2,825,000 $3,100,000
LRV = Unfavorable $275,000
LEV = Unfavorable $175,000
On investigation, it has been determined that the purchasing department employee bought higher quality materials than the specifications call for, but did not confirm the purchase with anyone nor notify anyone of the higher quality. All of the variances above resulted from this one purchasing decision.
1) Determine what you would do regarding the actions taken by the purchasing department, should the person be terminated, pay for the losses, etc. Be creative.
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