• Avatar of johnmoffat says

      @ryanpieblock, In management accounting we always value the inventory at standard cost. The reason is that the management accountant will usually be doing statements monthly and it will be silly to keep valuing the inventory differently just because some months we spent a more than we should have, and some months we spent less than we should have.
      This is different than the financial accounts (because in financial accounts inventory will be valued at actual cost) but we are not doing financial accounts.

      In practice the standard cost might well be changed during the year, but not for Paper F2.

  1. Avatar of Miss A.. says

    Dear Sir,I can’t get why is sales price variance ‘ adverse’ in the above example??

    shouldn’t it be favourable…??
    because actual sales at actual Selling price ……..$613200
    actual sales at standard selling price………………..$630000

    actual results are lower than expected.Shouldn’t it be favourable because it is saving cost??

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