Re: var accounts

["Bob Tenney" <bobtenney@xxxxxxxxxxxxx>]

Jeff, When you use standard costing, there is an assumption that your
standards fairly represent your costs for your company as a whole. As long
as variances for the company as a whole are small they are treated as
adjustments to your cost of sales even though a small portion of these
variances may technically be for items that are still in inventory. As long
as you do this in a consistent way, the difference is considered immaterial
for GAAP purposes.

What if your variances, for the company as a whole, are material? In this
case you need to allocate the variances between inventory and cost of sales
"as if" your standards had fairly represented your costs. (Good Luck)

What is material? Ask your auditor.

Bob Tenney, CPA
bobtenney@earthlink.net
828-526-8976
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