Asked by Danielle O'Brien on May 20, 2024
Verified
When Raw Materials, Work in Process, and Finished Goods are recorded and carried at their standard cost, the actual prices paid for inputs and the actual quantities of inputs that are used in production affect the costs recorded in the inventory accounts.
Inventory Accounts
Inventory accounts are financial accounts used to track the quantities and costs of products a company holds for sale in the normal course of business.
Standard Cost
Predetermined or estimated costs used for cost control and decision making in manufacturing.
Actual Prices
The real prices at which goods and services are sold, differing from list or nominal prices.
- Understand the effect of actual input prices and quantities on inventory valuation in a standard costing system.
Verified Answer
PP
PRALABH PRASHARMay 26, 2024
Final Answer :
False
Explanation :
When inventory is recorded at standard cost, the costs in the inventory accounts reflect predetermined standard costs, not the actual costs or quantities of inputs. Variations from standard costs are typically recorded in variance accounts.
Learning Objectives
- Understand the effect of actual input prices and quantities on inventory valuation in a standard costing system.