Which of the following statements is(are) true?
(A) If variances are prorated at the end of the accounting period, an unfavorable direct materials price variance will, when prorated, increase the value of the Finished Goods Inventory.
(B) Insignificant variances are not generally prorated at the end of the accounting period and are closed to the Cost of Goods Sold.
A) Only A is true.
B) Only B is true.
C) Both of these are true.
D) Neither of these is true.

Question

Quizplus · Accepted Answer

An unfavorable direct materials price variance, when prorated, increases the value of the Finished Goods Inventory. Insignificant variances are typically closed to the Cost of Goods Sold rather than being prorated.

Which of the Following Statements Is(are) True