A standard costing system will produce the same income as an actual costing system when end-of-period standard cost variances are assigned:
A) Only to work-in-process (WIP) inventory.
B) Only to finished goods inventory.
C) To work-in-process and finished goods inventories.
D) Entirely to cost of goods sold.
E) To cost of goods sold and all inventory accounts.

Question

Quizplus · Accepted Answer

Standard costing systems can produce the same income as actual costing systems when end-of-period standard cost variances are allocated across cost of goods sold and all inventory accounts (work-in-process, finished goods, and possibly raw materials). This ensures that the total costs reflected in the financial statements match those that would have been reported using actual costs, by appropriately adjusting the reported values of inventories and cost of goods sold for the variances.

A Standard Costing System Will Produce the Same Income as an Actual