Kellems 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 has provided the following information:
The company does not have any variable manufacturing overhead costs and it recorded the following variances during the year:
The adjusted Cost of Goods Sold after closing all of the variances to Cost of Goods Sold will be closest to:
A) $380,222
B) $344,818
C) $362,520
D) $472,562

Question

Kellems 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 has provided the following information:
 The company does not have any variable manufacturing overhead costs and it recorded the following variances during the year:
 The adjusted Cost of Goods Sold after closing all of the variances to Cost of Goods Sold will be closest to:
A) $380,222 
B) $344,818 
C) $362,520 
D) $472,562

Quizplus · Accepted Answer

11ea7761_16d9_8b59_81a5_57c20e4cfbfc_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.
 11ea7761_16d9_8b5a_81a5_116bd8b80c0f_TB2580_00

Kellems Corporation Manufactures One Product