What is the most common treatment of the fixed-overhead budget variance at the end of the accounting period?
A)Reported as a deferred charge or credit.
B)Allocated among Work-in-Process Inventory,Finished-Goods Inventory,and Cost of Goods Sold.
C)Charged or credited to Cost of Goods Sold.
D)Allocated among Cost of Goods Manufactured,Finished-Goods Inventory,and Cost of Goods SolD.
E)Charged or credited to Income Summary.

Question

Quizplus · Accepted Answer

The most common treatment of the fixed-overhead budget variance is to charge or credit it to Cost of Goods Sold. This is because fixed-overhead expenses are considered indirect costs of production and are included in the cost of goods sold calculation. Charging or crediting the variance directly to Cost of Goods Sold allows for a true representation of the actual cost of producing the goods sold during the accounting period.

What Is the Most Common Treatment of the Fixed-Overhead Budget