Isenberg Corporation manufactures one product.It does not maintain any beginning or ending Work in Process inventories.The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold.The company does not have any variable manufacturing overhead costs.It recorded the following variances during the year:
When the company closes its standard cost variances,the Cost of Goods Sold will increase (decrease)by:
A) ($4,500)
B) $4,500
C) $96,955
D) ($96,955)

Question

Isenberg Corporation manufactures one product.It does not maintain any beginning or ending Work in Process inventories.The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold.The company does not have any variable manufacturing overhead costs.It recorded the following variances during the year:
 When the company closes its standard cost variances,the Cost of Goods Sold will increase (decrease)by:
A) ($4,500) 
B) $4,500 
C) $96,955 
D) ($96,955)

Quizplus · Accepted Answer

11ea7761_16d4_a942_81a5_11fd65d0abcd_TB2580_00 An unfavorable total variance has the effect of increasing Cost of Goods Sold and thereby decreasing Retained Earnings. A favorable variance has the opposite effects on Cost of Goods Sold and Retained Earnings.

Isenberg Corporation Manufactures One Product