Recording and disposition of variances Kurtis & Rank Company produces a variety of products using a process costing system with standard costs. It accumulates variances in a separate variance account for each resource used in production. At the end of each month it disposes of all variances by allocating them to work in process, finished goods, and cost of goods sold if the total variance is 5 percent or more of standard direct cost of a product. If the total variance is less than 5 percent of standard cost, all variances are transferred to cost of goods sold. Below is a summary variance report for one of the company's products:

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Resource Processing labor. Packaging labor Component F8 Component P8 Packaging materials Total .... KURTIS & RANK COMPANY Summary Variance Report Work in Process for Lotion FAP-8 For the Month Ending June 30 Standard Rate or Efficiency Direct Price or Quantity Actual Cost Variance Variance Cost $ 7,500 $122 U $ 89 F $ 7,533 1,680 18 F 65 U 1,727 19,000 280 F 12 F 18,708 11,300 600 U 572 F 11,328 1,200 65 U 27 U 1,292 $40,680 $40,588 By the end of June, 90 percent of the work in process has been completed and 85 percent of the finished goods has been sold.