Operating expenses, inventory  and deposit liability 1.3.1  Cost of sales and inventory COST OF SALES RAW MATERIAL RISKS 1.3  SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS At least once a year, the local entities assess  whether the standard cost of inventories is a close approximation of the actual cost.  The standard cost is also revised if during  the year it deviates by more than 5% from  the actual cost of the individual product.  Management also assesses the impact on  the standard cost of government and other  grants received to fund operating activi- ties. This involves assessing the terms and  conditions of grants received, including the  risk of any repayment. Funding and grants are recognised in the  income statement in the same period as  the activities to which they relate. Indirect production overheads are cal- culated on the basis of relevant assump- tions as to capacity utilisation, production  time and other factors pertaining to the  individual product. The calculation of the net realisable  value of inventory is mainly relevant to  packaging materials, point-of-sale mate- rials and spare parts. The net realisable  value is normally not calculated for beer  and soft drinks because their limited  shelf-life means that slow-moving goods  must be scrapped instead. Following  the economic downturn, the individual  entities in the Group have paid special  attention to inventory turnover and the  remaining shelf-life when determining  the net realisable value and scrapping. As the underlying markets for the specified  categories of raw materials vary, so does  the way in which they are hedged against  price increases. The most common form of  hedging is fixed-price agreements in local  currencies with suppliers. To hedge the implicit risk of volatile alu- minium prices associated with the purchase  of cans, the Group’s purchase price in the  majority of purchase agreements is variable  and based on the global market price of  aluminium (London Metal Exchange, LME).  The Group is thus able to hedge the underly- ing aluminium price risk.  For 2013, the majority of the aluminium price risk has been hedged for Western  Europe and Eastern Europe, and for 2014  the risk has been partially hedged. The  total volume of aluminium purchased via  financial instruments was approximately  110,800 tonnes at the end of 2013 (2012:  97,300 tonnes). Based on this volume, and  assuming 100% efficiency, a 10% increase  (decrease) in aluminium prices would impact  equity positively (negatively) by DKK 108m  (2012: DKK 106m). Fair values of the finan- cial instruments are specified in section 4.8. Cost of sales decreased by 0.6%. The cost per  hl declined slightly compared to last year.  Cost of materials mainly relates to barley/ malt, hops, glass, cans and other packaging  materials.  Purchased finished goods include cost of  point-of-sale materials sold to customers  and third-party products.  Research and development costs of DKK  -99m (2012: DKK -96m) have been recognised  in the income statement as incurred. Inventory increased due to the acquisition of  Chongqing Brewery Group, which was fully  consolidated from December 2013 and there- fore impacted the level of inventory at year- end while having only a minor impact on the  cost of sales (only included for one month). Raw material risks are associated in particular  with purchasing of cans (aluminium), malt (bar- ley) and energy. The management of raw ma- terial risks is coordinated centrally and aimed at  achieving stable and predictable raw material  prices in the long term and avoiding capital and  liquidity being tied up unnecessarily. Carlsberg Group Annual Report 2013 Consolidated financial statements SECTION 1: OPERATING ACTIVITIES 64 DKK million 2013 2012 Cost of materials 19,650 19,566 Direct staff costs 1,400 1,375 Machinery costs 944 902 Depreciation, amortisation and  impairment losses 2,863 2,815 Indirect production  overheads 3,687 3,682 Purchased finished  goods and other costs 5,078 5,491 Total 33,622 33,831 DKK million 2013 2012 Raw materials and  consumables 2,319 2,332 Work in progress 319 304 Finished goods 2,124 1,905 Total 4,762 4,541 INVENTORY