When Inventory Valuation Is Based on an Appropriately Established and Effective

Multiple Choice

When inventory valuation is based on an appropriately established and effective standard cost system:

A) cumulative variances are recognized.
B) a significant unfavorable net variance may be reported as an expense of the current period.
C) an insignificant favorable net variance may be reported as an expense of the current period.
D) the explanatory notes to the financial statements will explain the disposition of the net variance.