Consider the cost of inefficiencies


Some accountants argue that variances should be written off directly to cost of goods sold. regardless of materiality, because:

a.proration requires too much effort

b.It is consistent with income tax regulations

c.This treatment is required under generally accepted accounting principles

d.prorating them implies that assets values on the balance sheet contain the cost of inefficiencies

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Accounting Basics: Consider the cost of inefficiencies
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