- A
Use an inventory adjustment journal to revalue the on-hand inventory to the new standard cost and change the item's standard cost in the item master.
Why wrong: Incorrect: Inventory adjustment journals do not change standard costs; they adjust inventory value.
- B
Create a standard cost revaluation journal for the current period and update the standard cost in the costing version with immediate effect.
Why wrong: Incorrect: This changes the cost now, not from the next fiscal year.
- C
Post the manufacturing variances to a variance account and close the variances to cost of goods sold at year-end.
Why wrong: Incorrect: This does not adjust the standard cost.
- D
Create a costing version with the new standard costs and set the effective date to the start of the next fiscal year. Then run a cost revaluation journal to revalue inventory at the new cost.
Correct: This schedules the change for the next fiscal year and revalues inventory.
Quick Answer
The correct approach is to create a costing version with the new standard costs and set the effective date to the start of the next fiscal year, then run a cost revaluation journal to revalue inventory at the new cost. This works because the costing version allows you to define a future effective date for standard cost changes, ensuring the adjustment aligns with the company’s fiscal calendar, while the cost revaluation journal updates the inventory on hand to reflect the new standard cost without affecting current-period transactions. On the MB-920 exam, this scenario tests your understanding of standard cost variance adjustment and the importance of future effective dates in Dynamics 365 Finance, often appearing as a trap where candidates mistakenly choose immediate adjustments or variance postings. A common memory tip is to think of the costing version as a “time machine” for costs—set the date first, then revalue the stock.
MB-920 Describe Dynamics 365 Finance Practice Question
This MB-920 practice question tests your understanding of describe dynamics 365 finance. Read the scenario carefully and evaluate each option against the stated constraints before committing to an answer. After answering, compare your reasoning against the explanation and wrong-answer breakdown below. Once you have made your selection, read the full explanation to reinforce the concept and understand why each distractor is designed to mislead on exam day.
You are the Dynamics 365 Finance consultant for Contoso Ltd., a manufacturing company that uses standard cost inventory valuation. The company recently implemented a new production line for a high-volume product. The production manager reports that the actual manufacturing costs significantly exceed the standard costs set for the product. You need to analyze the variance and adjust the standard costs for future periods. The company requires that any adjustment to standard costs be effective from the start of the next fiscal year, which begins in three months. Additionally, the inventory on hand must be revalued at the new standard cost. What should you do?
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
Create a costing version with the new standard costs and set the effective date to the start of the next fiscal year. Then run a cost revaluation journal to revalue inventory at the new cost.
Option B is correct because using a cost revaluation journal revalues inventory and changing standard costs through the costing version allows the new costs to be effective from a future date. Option A is wrong because adjusting in the current period would not wait for the next fiscal year. Option C is wrong because posting variances to a variance account does not change the standard cost. Option D is wrong because inventory adjustment journals do not change standard costs.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Use an inventory adjustment journal to revalue the on-hand inventory to the new standard cost and change the item's standard cost in the item master.
Why it's wrong here
Incorrect: Inventory adjustment journals do not change standard costs; they adjust inventory value.
- ✗
Create a standard cost revaluation journal for the current period and update the standard cost in the costing version with immediate effect.
Why it's wrong here
Incorrect: This changes the cost now, not from the next fiscal year.
- ✗
Post the manufacturing variances to a variance account and close the variances to cost of goods sold at year-end.
Why it's wrong here
Incorrect: This does not adjust the standard cost.
- ✓
Create a costing version with the new standard costs and set the effective date to the start of the next fiscal year. Then run a cost revaluation journal to revalue inventory at the new cost.
Why this is correct
Correct: This schedules the change for the next fiscal year and revalues inventory.
Related concept
Read the scenario before looking for a memorised answer.
Common exam traps
Common exam trap: answer the scenario, not the keyword
Many certification questions include familiar terms but test a specific constraint. Read the exact wording before choosing an answer that is generally true but wrong for this case.
Detailed technical explanation
How to think about this question
This question should be treated as a scenario, not a definition check. Identify the problem, the constraint and the best action. Then compare each option against those facts.
KKey Concepts to Remember
- Read the scenario before looking for a memorised answer.
- Find the constraint that changes the correct option.
- Eliminate answers that are true in general but not in this case.
- Use explanations to understand the rule behind the answer.
TExam Day Tips
- Underline the problem statement mentally.
- Watch for words such as best, first, most likely and least administrative effort.
- Review why wrong options are wrong, not only why the correct option is correct.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
How this comes up in practice
A startup's cloud architect reviews their monthly bill and notices costs are higher than expected for a long-running batch job. Switching from on-demand instances to Reserved Instances — or using Spot/Preemptible VMs — can reduce compute costs by up to 72 %. Questions like this test whether you understand the tradeoffs between commitment, flexibility, and cost across cloud pricing models.
What to study next
Got this wrong? Here's your next step.
Identify which MB-920 exam domain this question belongs to, then review the specific concept being tested. Practise related questions in that domain and focus on understanding why each wrong answer is tempting — not just why the correct answer is right.
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FAQ
Questions learners often ask
What does this MB-920 question test?
Describe Dynamics 365 Finance — This question tests Describe Dynamics 365 Finance — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: Create a costing version with the new standard costs and set the effective date to the start of the next fiscal year. Then run a cost revaluation journal to revalue inventory at the new cost. — Option B is correct because using a cost revaluation journal revalues inventory and changing standard costs through the costing version allows the new costs to be effective from a future date. Option A is wrong because adjusting in the current period would not wait for the next fiscal year. Option C is wrong because posting variances to a variance account does not change the standard cost. Option D is wrong because inventory adjustment journals do not change standard costs.
What should I do if I get this MB-920 question wrong?
Identify which MB-920 exam domain this question belongs to, then review the specific concept being tested. Practise related questions in that domain and focus on understanding why each wrong answer is tempting — not just why the correct answer is right.
What is the key concept behind this question?
Read the scenario before looking for a memorised answer.
About these practice questions
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Last reviewed: Jun 21, 2026
This MB-920 practice question is part of Courseiva's free Microsoft certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the MB-920 exam.
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