Concept Behind Actual Costing
When you use actual costing, all goods movements within a period are valuated preliminarily
at the standard price. At the same time, all price and exchange rate differences for the
material are collected in the material ledger.
At the end of the period, an actual price is calculated for each material based on the actual
costs of the particular period. The actual price that is calculated is called the periodic unit
price and can be used to revaluate the inventory for the period to be closed. In addition, you
can use this actual price as the standard price for the next period.
Hope this helps…