Which method of closing out the fixed MOH volume variance will have no effect on the financial statements, no matter the capacity used?
A)Allocating the fixed MOH volume variance to COGS.
B)Allocating the fixed MOH volume variance equally among WIP Inventory, FG inventory and COGS.
C)Prorating the fixed MOH volume variance to WIP Inventory, FG inventory and COGS.
D)Prorating the fixed MOH volume variance to FG inventory and COGS.

Question

Quizplus · Accepted Answer

Prorating the fixed MOH volume variance to WIP Inventory, FG inventory, and COGS ensures that the variance is distributed across all relevant accounts, minimizing its impact on any single financial statement line item.

Which Method of Closing Out the Fixed MOH Volume Variance