Learn about Redwood and be one of the first to join the conversation

Visit Redwood Community
In standard Costing - How could we account the Variance for the below scenario? — Cloud Customer Connect
You're almost there! Please answer a few more questions for access to the Applications content. Complete registration
Interested in joining? Complete your registration by providing Areas of Interest here. Register

In standard Costing - How could we account the Variance for the below scenario?

Accepted answer
14
Views
4
Comments

Summary:

Content (required): Day1: Receive the item for 1000 qty with a standard cost of 1 USD/unit. so the inventory valuation accounting is:

Qty Cost Entry

1000 1 1000 Dr

Day2: Depletion of the item for 500 qty with a standard cost of 1.1 usd/unit.

so the inventory valuation accounting is:

Qty        Cost         Entry

1000         1          550 Cr

Day n: Standard cost changes to 1.2 usd/unit

So the inventory value (from valuation report) is 500*1.2 = 600 USD

But the trial balance shows 1000-550 = 450.

How would businesses report the inventory balance in this scenario (considering Day n is the cut-off date to report financial results)


Version (include the version you are using, if applicable): 22C

Howdy, Stranger!

Log In

To view full details, sign in.

Register

Don't have an account? Click here to get started!