standard costing variances

[umairsiddiqi]

Hi everyone, i just started working as an auditor (my first job) and recently came across this entity in which standard costing is followed for valuation of inventory.

Now my question is if inventory is valued at standard costs, how does one incorporate variances into it's cost to give a true and fair view of inventory? Also, do you just incorporate the total variance calculated for the entire period into the standard cost of inventory or is there any other way of finding out the variances that are to be included in the ending inventory?

I've thought about this quite a lot and honestly have no answer. I'm hoping you guys are able to help me. Thanks