5. Fixed Price Under this method, the issue price is fixed for a whole period. The rate is used for costing the issues irrespective of the purchase price. It is clear that such a method will introduce an element of profit or loss in the value of material used. For example, if the purchase price is 3.5 and the issue price has been fixed at 26 per unit, every time an issue is made a profit of . 1 per unit will be created. Thus, the Store Ledger will be complicated. Even the advantages of the market price method are not available under this method simply because the fixed price will be different from the market price. 6. Standard Price 920 Standard Price is predetermined price fixed on the basis of a specification of all the factors affecting that price." Firms which follow standard costing will record all the receipts and issues of materials at the standard price which will be fixed in advance. In this case, both the receipts and issues will be costed at a standard rate. In case the purchase price is more or less than the standard price, the difference is charged to an account which is known as the standard price, the difference is charged to an account which is known as "Price Variance Account". For example, if the standard price is 7. 5 per unit and the actual price is 2. 5.50. then the Stores Ledger will be debited at the rate of 2.5 and Price Variance Account with 50 paise per unit. Issues are all costed at the standard price. It serves to measure efficiency in use of materials, also it saves clerical labour. 7. Inflated Price Where materials are subject to natural wastage the cost may be inflated to account for the wastage. Thus, if 100 units of materials are bought for 150 and if, out of this, only 90 units can be normally used (the other ten going to waste), the issues may be costed not at 7. 1.50 per unit but at 1.67 per unti, .e. 150 + 90. With the actual issue of 90 units the amount will be exhausted and so will the actual quantity. Both in the stores ledger a quantity balance of 10 units will remain; it should be written off. Illustration 20: (Issue at Standard Price): Prepare Stores Ledger Account from the following purchases and issue of materials, when issues are priced at standard rate of 20 per unit: Purchases 400 units @ 20 per unit 350 units. 18 per unit Issues 300 units 400 units Purchases 400 units 20 per unit 250 units @ *. 25 per unit Issues 500 units