Parnell Company prepared its income statement for internal use. How would amounts for cost of goods sold and variances appear?
A) Cost of goods sold would be at actual costs and variances would be reported separately.
B) Cost of goods sold would be combined with the variances and the net amount reported at standard cost.
C) Cost of goods sold would be at standard costs and variances would be reported separately.
D) Cost of goods sold would be combined with the variances and the net amount reported at actual cost.

Question

Quizplus · Accepted Answer

Parnell Company prepared its income statement for internal use, which means it will use standard costs, not actual costs. Therefore, cost of goods sold would be at standard costs, and variances would be reported separately. This way, management can analyze and understand the reasons for the variances and take appropriate actions to address any issues or inefficiencies.

Parnell Company Prepared Its Income Statement for Internal Use