7-12

Unfavorable standard cost variances are normally closed at the end of the period by: Debiting the variance account and crediting Cost of Goods Sold. Crediting the variance account and debiting Cost of Goods Sold. Debiting the variance account and crediting Work-in-Process. Crediting the variance account and debiting Work-in Process. When standard costs are used in a cost accounting system: A favorable cost variable results when standard amounts are less than actual cost. Cost variances are shown in the year-end balance sheet as assets, if favorable, or as liabilities, if unfavorable. Costs changed to the Work-in-Process Inventory. Finished Goods Inventory, and Cost of Goods Sold accounts are actual costs. Costs charged to the Work-in-Process Inventory. Finished Good Inventory, and Cost of Goods Sold accounts are at standard cost. In a standard cost system, cost of Roods sold arc reported In: The balance sheet at standard cost. The balance sheet at actual cost. The income statement at standard cost. The income statement at actual cost Dawson Company has a union contract which calls (or an 8% cost of living increase in the wages paid to all factory workers as of July 1 of the current year. This suggests that: The labor rate variance for July will be unfavorable. The labor rate variances during the first half of the current year have been favorable. The standard labor cost per unit should be revised as of July 1. The labor efficiency variance for July will be unfavorable. Why does a company use standard cost system instead o just going through the budgeting process and then comparing budget to actual? (ta. how does standard cost system differ from budget to actual) Explain how the labor efficiency and labor rate variances can be inter-dependent