Final answer:
Manufacturing cost variances are apportioned to both the income statement and balance sheet of the current period, affecting the cost of goods sold and the valuation of end-period inventory.
Step-by-step explanation:
The proration of manufacturing cost variances among ending inventories and cost of goods sold has the effect of carrying the cost (savings) due to inefficient (efficient) operations of a period to both the income statement of the current period and the balance sheet of the current period.
This result aligns with the matching principle in accounting, which states that costs should be recognized in the period in which the associated revenues are recognized. Consequently, any variances in manufacturing costs are allocated to the cost of goods sold and to inventory on hand, ensuring that the cost of goods sold reflects the actual cost of manufacturing the goods during that period and that the inventory is valued at the actual cost to produce them.