MB-920 Describe Dynamics 365 Supply Chain Management Practice Question
A company needs to calculate the cost of manufactured products including direct materials, labor, and overhead. Which costing methodology in Dynamics 365 Supply Chain Management should they use?
⚠ Common exam trap
Candidates often confuse inventory valuation methods (FIFO, weighted average, moving average) with manufacturing costing methodologies, but standard costing is the only option that explicitly handles the calculation of manufactured product costs including direct materials, labor, and overhead.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Standard costing
Standard costing is the correct methodology because it allows the company to define predetermined costs for direct materials, labor, and overhead, and then calculate variances against actual costs. In Dynamics 365 Supply Chain Management, standard costing is specifically designed for manufacturing scenarios where you need to value inventory and cost of goods sold based on expected costs, with variance tracking for deviations.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Weighted average
Why it's wrong here
Weighted average is an inventory valuation method, not a costing methodology.
- ✓
Standard costing
Why this is correct
Standard costing uses predetermined costs for materials, labor, and overhead to calculate product costs.
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FIFO
Why it's wrong here
FIFO is an inventory valuation method, not a costing methodology for manufacturing.
- ✗
Moving average
Why it's wrong here
Moving average is a costing method for inventory, not for manufacturing.
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