Which of the following is characteristic of the disposition of materials and labour variances?
A)The variances for materials and labour are closed directly to cost of goods sold regardless of materiality.
B)If the materials price variance is material, it is prorated among materials inventory, materials usage variance, work in process, and finished goods.
C)The materials usage variance and the labour variances, if material, are prorated among work in process, finished goods, and cost of goods sold.
D)The materials usage variance and the labour variances are prorated among work in process, finished goods, and cost of goods sold.

Question

Quizplus · Accepted Answer

The materials usage variance and the labour variances, if material, are prorated among work in process, finished goods, and cost of goods sold. This is because they are related to the production process and affect the cost of goods sold. However, the materials price variance may be prorated among materials inventory, materials usage variance, work in process, and finished goods, depending on its materiality.

Which of the Following Is Characteristic of the Disposition of Materials