Average cost

thinafans

Dear all,

I have choosed costing method as Standard for FG & SFG,and all the Rawmaterials i have choosed costing method as average.

In this case i have arrived my standard cost for all fg & sfg.

After some times the Rawmaterial cost is high,so my average cost also will change.

1.In this case if i post the output for sfg or fg my standard cost will affect or not.
2.My actual amount field it will consider the varience of rawmaterial cost or it won't
3.Otherwise the varience of average cost will go to our material varience.

Note :
Client told us the standard cost should not be vary

Pls guide me

Deep

Variance is calculated only for items where costing method is Standard.
For any other method, variance is not calculated.

3.Otherwise the varience of average cost will go to our material varience.

Kindly elaborate as the meaning is not clear.

thinafans

Thank u very much deep.

Last two days i am waiting for the reply.But today i got.

I am only fixing standard cost for my FG & SFG

Average cost also i am fixing in the item card,After it will vary while posting the purchase invoice.

My question is First time when i am calculating the standard cost it will take from the Average cost which i have enter manually.

Then I am posting output for SFG & FG in this case just assume my raw material cost is high means,my Average cost also will vary.

after posting the output i will run adjust cost item entries,Now which cost system will consider for G/L.

Whether my previous standard cost or It will vary.

Suppose it will vary means,from where it is taking?

washbowl

thinafans wrote:

Thank u very much deep.

Last two days i am waiting for the reply.But today i got.

I am only fixing standard cost for my FG & SFG

Average cost also i am fixing in the item card,After it will vary while posting the purchase invoice.

My question is First time when i am calculating the standard cost it will take from the Average cost which i have enter manually.

Then I am posting output for SFG & FG in this case just assume my raw material cost is high means,my Average cost also will vary.

after posting the output i will run adjust cost item entries,Now which cost system will consider for G/L.

Whether my previous standard cost or It will vary.

Suppose it will vary means,from where it is taking?

Your FG&SFG ouput is always recorded by standard cost on their item card, which means they go out of WIP by their standcost. All consumption of materials go into WIP by their average cost. The difference go to material variance account. (These is no seperate WIP account in WIP for material quantity variance and material price variance)

Standard cost will never change unless you recalculte and update them which you are not supposed to do very often.