Which of the Following Is True Regarding the Disposition of Materials

question 167

Multiple Choice

Which of the following is true regarding the disposition of materials and labor variances?

• A) The variances for materials and labor are closed directly to Cost of Goods Sold regardless of materiality.
• B) If the materials price variance is material, it is prorated among Materials Inventory, Materials Usage Variance, Work in Process, and Finished Goods.
• C) The materials usage variance and the labor variances, if material, are prorated among Work in Process, Finished Goods, and Cost of Goods Sold.
• D) The materials usage variance and the labor variances are always prorated among Work in Process, Finished Goods, and Cost of Goods Sold.
• E) The materials usage variance and the labor variances are always closed to Cost of Goods Sold.

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Definitions:

Preventive Maintenance

Scheduled maintenance activities designed to prevent equipment failures before they occur, aimed at reducing downtime and increasing reliability.

Breakdown Maintenance

involves repairs or adjustments made after equipment has failed, aiming to restore it to operational condition.

MTBF

"Mean Time Between Failures," a reliability measure for products indicating the average time between operational failures.