When standard manufacturing costs are recorded in the accounts and the cost variances are immaterial at the end of the accounting period, the cost variances should be:
A) Closed to cost of goods sold.
B) Written off as a selling expense.
C) Ignored.
D) Carried forward to the next accounting period.
E) Allocated between cost of goods sold, finished goods, and work in process.

Question

Quizplus · Accepted Answer

When cost variances are immaterial, they are typically closed to the cost of goods sold to simplify accounting and reflect the actual cost of production in the financial statements.

When Standard Manufacturing Costs Are Recorded in the Accounts and the Cost