Standard costing will produce the same income before extraordinary items as actual costing when standard cost variances are assigned to:

Question

Quizplus · Accepted Answer

Standard costing will produce the same income before extraordinary items as actual costing when standard cost variances are assigned to cost of goods sold and inventories. This is because assigning the variances to the inventory will cause a mismatch between the costs expensed in the period and the costs incurred in that same period. Assigning the variances to the income or expense account would result in a distortion of the income statement, as it would increase or decrease the reported income. Therefore, C is the best choice.

Standard Costing Will Produce the Same Income Before Extraordinary Items