MB-330 Implement and Manage Supply Chain Processes Practice Question
A manufacturer uses Dynamics 365 Supply Chain Management. They need to track the cost of a raw material that fluctuates daily. The material is stored in a single warehouse but issued to production at standard cost. They want to update the standard cost periodically without manual journal entries. Which cost accounting approach should they use?
⚠ Common exam trap
The trap here is assuming that moving average or FIFO can be used with standard cost issuing; they cannot because they track actual costs, not a fixed standard.
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 cost with cost roll-up and periodic revaluation
Standard cost with cost roll-up and periodic revaluation is designed for environments where items are issued at a fixed standard cost. The roll-up recalculates the standard based on current component costs, and revaluation adjusts inventory and variances without manual journals. This matches the need to update standards periodically while maintaining stable production costing.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Moving average
Why it's wrong here
Moving average recalculates inventory value on every receipt, which conflicts with the requirement to issue at a fixed standard cost. It would cause production variances to be calculated differently and would not allow periodic standard cost updates without recalculating all issues. This approach is suited for items where actual cost flow is desired, not for standard cost environments.
- ✗
LIFO
Why it's wrong here
LIFO issues the most recent receipt cost, leading to fluctuating issue costs that contradict a standard cost policy. It also does not provide a mechanism for periodic standard cost revaluation. LIFO is typically used for financial reporting in specific jurisdictions, not for standard cost manufacturing scenarios.
- ✓
Standard cost with cost roll-up and periodic revaluation
Why this is correct
Standard cost with cost roll-up allows you to define a standard cost for the raw material and periodically update it through a cost roll-up and revaluation process. This updates inventory values and production variances without manual journals, matching the requirement to issue at standard and adjust periodically.
- ✗
FIFO
Why it's wrong here
FIFO issues inventory based on the oldest receipt cost, which means production would consume at varying actual costs, not a fixed standard. It does not support periodic standard cost updates through a roll-up; instead, it recalculates cost layers. This method is inappropriate when a stable standard cost is required for production reporting.
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Written and reviewed by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
Last reviewed September 2026 · checked against the official Microsoft exam blueprint
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