When a manufacturing company employs standard costs,all costs affecting the three inventory accounts and the Cost of Goods Sold account are stated in terms of actual costs rather than in terms of standard costs incurred.

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When a manufacturing company employs standard costs, costs affecting the three inventory accounts (raw materials, work-in-progress, and finished goods) and the Cost of Goods Sold account are stated in terms of standard costs incurred, not actual costs. Actual costs may be tracked separately for comparison to the standard costs.

When a Manufacturing Company Employs Standard Costs,all Costs Affecting the Three