FINISHED GOODS VALUATION AT STANDARD COST: REVISING COST STANDARDS BASED ON ACCOUNTING AND ANALYTICAL INFORMATION

Abstract

The article substantiates an approach to using accounting and analytical information as a basis for decision-making on the revision of standard (planned) production cost, at which finished goods are valued and recognized in accounting before their actual cost is determined. It is shown that the mismatch between the length of the production cycle and the accounting (calendar) period necessitates the prompt write-off of finished goods at standard cost, which systematically generates discrepancies between standard and actual cost that affect the reliability of inventory valuation in financial statements. It is demonstrated that a decision to revise the standard should not be made after every single deviation, since some deviations are random in nature, whereas only persistent, recurring deviations indicate the need to adjust planned indicators. Based on a synthesis of domestic and international experience, a research gap is identified at the intersection of the standard costing tradition and statistical process control methods used in metrological practice, in particular those regulated by DSTU ISO 8258:2001, which have not previously been combined with the task of revising standard cost under conditions of the monthly formation of overhead costs. An accounting and analytical criterion is proposed that distinguishes random from systematic deviations based on an individuals and moving range chart, supplemented by an independent economic materiality criterion, including point and trend rules for detecting persistent process shifts. A conditional numerical example of the criterion's application, built through statistical simulation, is provided; practical aspects of automating the calculations in accounting software are examined; and the limitations of the methodology, arising from the limited number of annual observations of full production cost, are outlined, along with directions for further research. The proposed approach can be used in improving management accounting information systems at enterprises whose production cycle does not coincide with the accounting period.