Question
A food manufacturer uses commodities such as beans, corn, and chili peppers as raw materials. The prices of the commodities fluctuate frequently. The manufacturer wants to use cost versions to simulate these fluctuations.
You need to set up cost versions and prices to accomplish the manufacturer's goal.
For which purpose should you use each costing type? To answer, select the appropriate options in the answer area.
Explanation
Standard cost: a costing version of the standard cost type holds the standard cost records that support the standard cost inventory model for items and manufacturing processes. Planned cost: a costing version of the planned cost type is used for cost calculation simulations, such as the effect of changing purchased material prices on the calculated cost of manufactured items, which is what the manufacturer needs for fluctuating commodity prices.
