Asked by Sarah Gittins on Jul 28, 2024
Verified
In the Excel spreadsheet approach in Appendix 10B in the text, each variance has its own clearing account that appears on the right-hand side of the "=" sign. This enables us to record all favorable variances as increases to their respective clearing accounts and all unfavorable variances as decreases to their accounts.
Excel Spreadsheet
A digital worksheet or grid in Microsoft Excel, where users can organize data, perform calculations, and analyze information.
Clearing Account
An account used to temporarily hold transactions in progress or to reconcile discrepancies before the amounts are posted to the correct accounts.
- Understand the significance of standard costing for pinpointing and controlling variances in production.
Verified Answer
MS
Marky SalazarJul 31, 2024
Final Answer :
True
Explanation :
This is true as the clearing accounts are used to accumulate the variances and show the net impact on the overall budget. Favorable variances are recorded as increases to these accounts and unfavorable variances are recorded as decreases to the accounts.
Learning Objectives
- Understand the significance of standard costing for pinpointing and controlling variances in production.
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