Disposition of variances Part of the pre-closing trial balance of Karen N. Rick Company is shown on the following page.

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KAREN N. RICK COMPANY Trial Balance December 31 Debit Credit Raw Materials Inventory Work in Process Inventory. Finished Goods Inventory Sales Cost of Goods Sold 400,000 1,000,000 1,250,000 7,540,240 4,000,000 Material Purchase Price Variance. 18,900 Material Quantity Variance ..... 82,600 Direct Labor Rate Variance 97,800 Direct Labor Efficiency Variance .. Total Mfg. Overhead Variance ... 1,900 0 Administrative Salaries .... 189,750 An analysis of various accounts indicates the following proportions of product costs in each. Direct materials. Direct labor .... Manufacturing overhead Work in Finished Process Goods CGS 15% 20% 15% 50 8 35 35 72 50 Company policy is to distribute individual variances to cost of goods sold if they are less than 2 percent of CGS, and to all product cost accounts if the variances are 2 percent or more of CGS.