Small matrix to help understand the difference between the standard and moving average cost in BYD:
|Standard Cost||Moving Average|
|Inventory Cost||Predetermined value that remains constant until changed manually||Average of current inventory value and all receipts of material into inventory|
|Goods Receipts||No effect on inventory cost||Recalculate inventory cost|
|Accounting for Differences||Differences resulting from business transactions and clearing runs are posted to difference accounts||Differences resulting from business transactions and clearing runs are allocated to inventory|
Accounting for Differences means that when You for example post Goods Receipt for 100 and invoice comes for 120 then if You have Standard Cost as valuation method you will get the 120-100=20 difference to Difference account in accounting and if you have Moving Average then the difference of 20 will be allocated to inventory(material).