Refer to Exercise 8-8. Listor Company records standard costs in its accounts and its material variances in separate accounts when it assigns materials costs to the Goods in Process Inventory account.
(1) Show the journal entry that both charges the direct materials costs to the Goods in Process Inventory account and records the materials variances in their proper accounts.
(2) Assume that Listor’s material variances are the only variances accumulated in the accounting period and that they are immaterial. Prepare the adjusting journal entry to close the variance accounts at period-end.
(3) Identify the variance that should be investigated according to the management by exception concept. Explain.