The reason we use the word 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 memo to our instructor with three parts that answer the fallowing three requirements. (Assume that variance accounts are closed to Cost of Goods Sold.) Required - 1. Does COGS increase or decrease when closing a favorable variance? Does gross margin increase or decrease when favorable variance is closed to COGS? Explain. 2. Does COGS increase or decrease when closing an unfavorable variance? Does gross margin increase or decrease when favorable variance is closed to COGS? Explain. 3. Explain the meaning of favorable and unfavorable variance