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.

Question

Quizplus · Accepted Answer

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.

When Raw Materials, Work in Process, and Finished Goods Are