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If standard cost variances are allocated (i.e., prorated) to inventory and cost of goods sold...

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Accounting

If standard cost variances are allocated (i.e., prorated) to inventory and cost of goods sold (CGS) accounts at the end of a period, which of the following is correct?

A: Conceptually, the amount allocated to each account is based on the relative amount of the current period's standard cost in the end-of-period balance in each account.

B: The resulting balances represent relative actual cost in each of the affected accounts.

C: There is a presumption that the net variance for the period is immaterial in amount.

D: The amount allocated to inventories is generally larger than the amount allocated to CGS.

E: Adjusting journal entries for income tax effects will have to be made.

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