Standard Cost

hansika

Hi Masters,


I learning navision. I completed Inventory costing manual. I understood the total book regarding costing method and remaining. But i could not under stand that Costing method "STANDARD".
I done senerioes regarding all costing methods, Still i could not understand the "Standard costing method".
Please explain about this costing method.At what conditions we will use this method. If it is possible please explain with one suitable example.

One more doubt After i put check mark in automatic cost posting, then i run that batch job Post inventory cost to G/L. At which values(that means from which table) it is taking values to post to G/L.
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Have a nice day

thanks and regards

themave

Wikipedia is your friend

http://en.wikipedia.org/wiki/Cost_accounting

Standard costing is an accounting decision you make about how you are going to record your inventory. This decision is usually made a single time as you are starting your company and filling tax returns, after you make an election to choose your inventory accounting method, you usually do not change it, at least not easily.

Using standard costing in Navision records inventory at the standard cost entered on the item card, and records the variance from the standard cost variance accounts, depending on what the item was purchased for or how much it actually cost to manufacture

so if standard cost for an item is set at $100 and you purchase it for $105

$100 is recorded in inventory and $5 is recorded in the purchase variance account you have set up.

ayhan06

One more doubt After i put check mark in automatic cost posting, then i run that batch job Post inventory cost to G/L. At which values(that means from which table) it is taking values to post to G/L.

"Value Entry" table is used. "Item Ledger Entry Type","Entry Type" and "Expected Cost" fields determine which account will be used to post the cost amounts to G/L.. Values in "cost amount (actual)" and "Cost Amount (expected)" fields will be posted to G/L.. (expected costs will be posted if "Expected Cost Posting to G/L" field in Inventory setp is checked.)

hope this helps

hansika

Thank U ayhan06&themave,

For example I want to Produce a item BIcycle. It has 5 BOMs.In item card i take standard costing method for Bicycle. But my doubt is which costingmethod should i take to BOMs. is It Fifo or Standard.
My problem is that BOMs rate keep change day by day. So which costing method should i take.If i take standrd itis not showing actual cost, that difference is showing purchase variance. What i feel I suggested my self fifo is suitable for BOMS. Is it correct or not.
Experts u implemented many projects on manufacturing . Please throw some suggestions.For BOms which costing method is better.
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thanks and regards

AdamRoue

This generally comes from the business itself. Traditionally manufacturing businesses cost account and standard cost annually, but that is no definition. Talk to the business what do they do? If you are learning you will need to know all ways

ayhan06

hansika wrote:

Thank U ayhan06&themave,

For example I want to Produce a item BIcycle. It has 5 BOMs.In item card i take standard costing method for Bicycle. But my doubt is which costingmethod should i take to BOMs. is It Fifo or Standard.
My problem is that BOMs rate keep change day by day. So which costing method should i take.If i take standrd itis not showing actual cost, that difference is showing purchase variance. What i feel I suggested my self fifo is suitable for BOMS. Is it correct or not.
Experts u implemented many projects on manufacturing . Please throw some suggestions.For BOms which costing method is better.
](*,) ](*,)



thanks and regards

if cost of components changes (because of exchange rate changes for imported items, high inflation rate, special component for special orders etc) very often, the accountants mostly do not select standart costing method. in that case, FIFO (or average costing) can be used..

of course, you must learn which costing method is usefull in which case... but eventually, your client must select costing method..

also, some legal requirements may strict your decision.. for example in turkey, if a company starts to use a costing method (e.g. average), they will have to use it for 5 years..