Question

If the net variance of a business using standard costing is significant relevant to total production cost, the net variance should be:

1) assigned to cost of goods sold.
2) allocated between WIP and FG inventories and cost of goods sold.
3) carried forward to the next accounting period.
4) None of these.

Answer 1

If the net variance of a business using standard costing is significant relevant to total production cost, the net variance should be allocated between WIP and FG inventories and cost of goods sold.

Step-by-step explanation:

If the net variance of a business using standard costing is significant relevant to total production cost, the net variance should be allocated between WIP and FG inventories and cost of goods sold. This means that the variance is divided among the work-in-progress (WIP) inventory, finished goods (FG) inventory, and cost of goods sold (COGS).