This is more of a general accounting practice question rather than a Dynamic issue but I've been asked to change the costing method for many of our manufactured items from Actual LIFO to Standard LIFO.
The general practice is that with standard costing, the item will always be manufactured and valued in inventory at the same cost each time it is manufactured. Any variances between the actual costs and standard costs get allocated to different account numbers for later reconciliation and analysis. For this reason, when changing an existing item to Standard costing, all existing LIFO layers (with varying costs) are deleted, (as the cost is now technically standard).
I've been asked to customize this behavior so that when changing from Actual LIFO to Standard LIFO, the existing costs layers do not get removed and also, future changes to the standard costs will also retain their own cost layers (providing the stock from layers is not depleted).
Is what I'm being asked to do compliable with GAAP/SOX? Every time I research standard costing, there is no mention of cost layers with regards to standard cost items, from my googling, I keep arriving at the answer that standard cost items can only have one cost.
Thanks
*This post is locked for comments
I have the same question (0)
