Yasaswi Gomes new (Finance ) (4514 Points)
12 January 2023Hi,
Amongst the cost methods like
Standard cost
Retail method
Fifo and
Weighted average,
Retail method if selling value minus gross margin, what is it for standard cost technique? Is a standard cost card used to determine the profit and price from it? An example please.
Txs
sabyasachi mukherjee
(27574 Points)
Replied 13 January 2023
CA Ganesh Agarwala
(Audit Senior Manager)
(239 Points)
Replied 14 January 2023
Standard cost method:
Under this methods, if you have inventory which is homogenous in nature and the price fluctuation and other cost related to Inventory does not change significantly or there are significant amount of intercompany transactions (between various companies in the group), you can book your inventory at a standard cost (which has to computed at the beginning of a period, the policy for the same should be stated clearly) and at the time of actual purchase the difference between Standard Price and actual cost is booked into various "Variance accounts" and inventory is carried at standard cost.
At The end of the reporting period the variance amount is loaded back to Inventory value based on the method of Inventory valuation followed by the Group.
sabyasachi mukherjee
(27574 Points)
Replied 15 January 2023
Yasaswi Gomes new
(Finance )
(4514 Points)
Replied 15 January 2023
Could be! Im womdering how it would be like if variance adverse or favourable amounts are added or taken out of closing inventory. Beside, only price variance is inclusive. Atleast, @ CAGanesh told something unique that google doesnt teach us. Standard costimg example is given in various ways.
CAclubindia
