Respond to each of the three (3) essay questions found on page 863, BTN21-2, 9th Edition Submit your answers in essay form. The instructor will manually grade your responses after the due date. COMMUNICATING IN PRACTICE Flexible Budgets and Standard Costs The reason we use the words favorable and unfavorable when evaluating variances is made clear when we look at the closing of accounts. To see this, consider that (1) all variance accounts are closed at the end of each period (temporary accounts), (2) a favorable variance is always a credit balance, and (3) an unfavorable variance is always a debit balance. Write a half-page memorandum to your instructor with three parts that answer the following three requirements. (Assume that variance accounts are closed to Cost of Goods Sold.) Required 1. Does Cost of Goods Sold increase or decrease when closing a favorable variance? Does income increase or decrease when a favorable variance is closed to Cost of Goods Sold? Explain. 2. Does Cost of Goods Sold increase or decrease when closing an unfavorable variance? Does income increase or decrease when an unfavorable variance is closed to Cost of Goods Sold? Explain. 3. Explain the meaning of a favorable variance and an unfavorable variance.