However, if more accurate information about the cost flow exists, then you can override this assumption by creating a fixed application between entries. For items that are subject to regulationĬosting methods make an assumption about how cost flows from an inventory increase to an inventory decrease.The specific cost criterion aims to individually evaluate the inventories, purchased or produced, determining the relative cost separately”Īn item’s unit cost is the exact cost at which the particular unit was received In production or trade of easily identifiable items with fairly high unit costs. Together with the posting date and sequence, the costing method also influences how the cost flow is recorded. The costing method determines if an actual or a budgeted value is capitalized and used in the cost calculation.
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