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Problem 1: Why should a production-volume variance (PVV) that is material be prorated among work-in-process, finished goods, cost and cost of goods sold rather than writing it all off to cost of goods sold?
a. If a PVV is always written off to cost of goods sold, then the assets on the balance sheet would be the same as actual costs.b. If a PVV is always written off to cost of goods sold, then the liabilities on the balance sheet would be overstated.c. If a PVV is always written off to cost of goods sold, then the balances in the inventory accounts on the balance sheet would be most accurate.d. If a PVV is always written off to cost of goods sold, a company could set its standard costs to either increase or decrease operating incomes.
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