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Former Member
Jun 09, 2009 at 11:02 AM

Settlement of production variance

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Dear experts,

Why do we settle the production variance to cost of production? At the time settlement the following entry has been posted.

Production variance A/C Dr

To Cost of production A/c.

When we post this entry at the time of settlement, there is no effect on P& L account because one account is getting debited and another account is getting credited. So no effect on financial stmnts.Our client is asking that credit the inventory account instead of cost of production account so that our inventory value will be increased to actuals. Is it possible? Please suggest me.

Regards

Jay