If a variance is unfavourable, it should be closed directly to cost of goods sold.

Question

Quizplus · Accepted Answer

Unfavorable variances are typically analyzed and addressed through adjustments in budgets or processes rather than being closed directly to the cost of goods sold. They are often reported to management for decision-making and may be allocated to various cost centers or accounts for a more accurate reflection of financial performance.

If a Variance Is Unfavourable, It Should Be Closed Directly