A company uses perpetual inventory and produces items in-house that are controlled by the standard cost valuation method. The standard cost value is set to 20. During the past month, the actual cost to produce this item increased to 25 due to labor costs. What is the effect on accounting and inventory each time this item is produced? Note: There are 2 correct Answers to this question.

• A.The cost of 25 is posted to the stock account.
• B.The cost difference 5 is posted to a variance account.
• C.A cost of 20 is posted to the stock account.
• D.The cost of goods sold for the item will be set at 25.

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