Costing Methods (continued)
Standard Cost Maintenance
When using the standard costing method, periodically you will need to review your costs to determine when the standards should be changed. This typically occurs at the time of a physical inventory.
When your company makes a change to a standard cost of a part, a general ledger transaction is recorded to the PPV (Purchase Price Variance) account for the difference between the old cost and the new cost times the number of parts in the warehouse. If a part is located in multiple warehouse locations, make certain to update the cost in all warehouses.