Break down the price variance into a charge variance and an exchange variance. What do these variances tell you? Note that the charge variance is based solely on the difference between the budgeted price and actual price (based on the currency rate used in the organization's budget). The exchange variance is based solely on the difference between the budgeted exchange rate and the exchange rate actually used in paying the invoice.

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Charge variancePurchase price variance and Exchange rate variance A rate of exchange variance ERV occurs when the invoice for the purchased item is during a different currency than the inventory busin... View the full answer