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) Carried forward to the next accounting period.
B) Allocated between cost of goods sold, finished goods, and goods in process.
C) Closed to cost of goods sold.
D) Written off as a selling expense.
E) Ignored.

Question

Quizplus · Accepted Answer

When the cost variances are immaterial, they are closed to cost of goods sold. This means that they are included in the cost of goods sold expenses for the accounting period and are not carried forward to the next period or allocated between other accounts. Writing them off as a selling expense or ignoring them would not be appropriate.

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