If a variance is considered material, it should be allocated to work in process inventory, finished goods inventory, and cost of goods sold.

Question

Quizplus · Accepted Answer

If a variance is considered material, it means that it has a significant impact on the financial statements. In such cases, the variance should be allocated to the appropriate inventory or cost of goods sold account. This helps to accurately reflect the cost of goods produced and sold, and provides a more meaningful view of the entity's financial performance.

If a Variance Is Considered Material, It Should Be Allocated