Standard Costing
Standard Costing lets manufacturers and wholesale distributors identify and correct problems with inventory costing issues by giving information about costing variances and their causes.
Using standard costing, you maintain standard costs across cost categories for an item. These standard costs identify the expenses you expect to incur for items over time. Keeping track of the expected cost lets you compare that amount to the item cost. You can then analyze any variances between the standard (expected) cost and actual cost of items.
Standard costing not only tells you that a variance occurs, but it also helps you understand why costs are different from what was expected. Variances might be caused by changes in how much you pay for the material or by changes in the quantity of material used:
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Purchase price variances are generated during the procurement process.
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Production quantity and cost variances are generated during the production process.
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Unbuilt variances are generated during the disassembly process.
Knowing the cause of the variance helps you to correct costing issues in your manufacturing and procurement processes and take action to improve these areas.
Related Topics
- Standard Costing Workflow
- Standard Costing Example
- Enabling Standard Costing
- Creating Cost Categories
- Creating Inventory Cost Templates
- Setting Up Item Records for Standard Costing
- Defining Cost Versions
- Entering Planned Standard Cost Records
- Standard Cost Rollup
- Revalue Standard Cost Inventory
- Standard Costing and Transactions
- Assembly Build Production Cost Variances
- Standard Costing FAQ
- Standard Costing Reporting
- Setting Inventory Costing Preferences
- Costing Methods
- Selecting a Default Cost of Goods Sold (COGS) Account
- Inventory Costing and Assembly Items
- LIFO/FIFO Inventory Costing and Advanced Receiving
- System Cost of Goods Sold Adjustments
- Viewing Inventory Reports
- Inventory Costing Recalculations
- Troubleshoot Inventory Costing
- Cost Accounting Status on Item Records
- Item Return Costing
- Group Average Costing
- Item Costing