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moving average and standard cost

Hi All,

I purchase raw material and trading item. assuming that my raw material is based on standard cost and trading item based on moving average.

1) if both item have no more inventory, the difference price between migo and miro will charge to price difference?

2) if raw material which base on standard cost still have inventory, may i know if there is a variance for migo and miro, the difference will go to where? if inventorise then what would happen to the standard cost.

3) if trading item which base on moving average still have inventory, the variance (between migo and miro) will be added to moving average. right?

4) for raw material which base on standard cost, may i know if freight cost, custom duty and some other miscellaneous cost need to add in, how possible it can add to the standard cost?

5) for trading item which base on moving average, may i know if freight cost, custom duty and some other miscellaneous cost also will be added in moving average price?

thanks

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1 Answer

  • Sep 18, 2008 at 01:00 PM

    Hi,

    1) if both item have no more inventory, the difference price between migo and miro will charge to price difference?

    Yes, this is correct as per Accounting Standards

    2) if raw material which base on standard cost still have inventory, may i know if there is a variance for migo and miro, the difference will go to where? if inventorise then what would happen to the standard cost.

    Any difference between the Standard Price in Material Master and Purchase Value (PO Price) will debit or credit the Price Difference A/c no matter whether stock exits or not.

    If Material Standard Price = 100 INR

    And PO Price is = 120 INR

    During MIGO;
    Stock Account - Dr - 100 INR
    Price Difference A/c - Dr - 20 INR
    GR/IR Clearing A/c - Cr - 120 INR

    3) if trading item which base on moving average still have inventory, the variance (between migo and miro) will be added to moving average. right?

    Yes, it will debit or credit Stock Account and will update MAP of Material accordingly if enough Stock coverage is there.

    4) for raw material which base on standard cost, may i know if freight cost, custom duty and some other miscellaneous cost need to add in, how possible it can add to the standard cost?

    No, all will get posted to Price Difference Account as following;

    If Material Standard Price = 100 INR

    And PO Price is = 120 INR and Freight = 10 INR

    During MIGO;
    Stock Account - Dr - 100 INR
    Price Difference A/c - Dr - 20 INR
    GR/IR Clearing A/c - Cr - 120 INR
    Price Difference A/c - Dr - 10 INR
    Freight Clearing A/c - Cr - 10 INR

    5) for trading item which base on moving average, may i know if freight cost, custom duty and some other miscellaneous cost also will be added in moving average price?

    Yes, it will get added to stock and will update MAP accordingly if enough Stock coverage is there.

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