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Consider the following set of circumstances for a business:

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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