Describe the core capabilities of the finance and operations apps →easyMultiple ChoiceObjective-mapped
MB-920 Practice Question: Describe the core capabilities of the finance and operations apps
A manufacturing company wants to track the cost of raw materials used in production in real-time. Which costing method should they use in Dynamics 365 Supply Chain Management?
⚠ Common exam trap
Watch out — candidates often confuse inventory valuation methods (FIFO, LIFO, Moving average) with costing methods used for real-time cost tracking, assuming any valuation method can provide real-time insights, but only standard costing is designed for immediate variance analysis in Dynamics 365.
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 method because it uses predetermined costs for raw materials, enabling real-time variance analysis against actual costs. This allows the manufacturing company to immediately identify and track cost deviations during production, which is essential for real-time cost monitoring in Dynamics 365 Supply Chain Management.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
FIFO (First In, First Out)
Why it's wrong here
FIFO is an inventory valuation method that does not provide real-time cost tracking.
- ✓
Standard costing
Why this is correct
Standard costing uses predetermined costs, enabling real-time variance analysis.
- ✗
LIFO (Last In, First Out)
Why it's wrong here
LIFO is an inventory valuation method that does not provide real-time cost tracking.
- ✗
Moving average
Why it's wrong here
Moving average updates cost after each transaction, but not in real-time for production.
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