Standard Cost

Standard costing is the practice of substituting an expected cost for an actual cost in the accounting records, and then periodically recording variances showing the difference between the expected and actual costs.

For more information visit Accounting Tools Standard Costing.

Setup

  • Company Info > Parts > Main
  • Company Info > Accounting > GL Defaults Standard Cost GL account – This is the variance account used when receiving.

Invoicing

  • The replacement cost and average cost are not used in the accounting transaction for parts relieved from inventory. Instead, the Standard cost is used.

Receiving

  • If the replacement cost changes on a receiving ticket, it updates the replacement cost in Master Inventory
  • The Standard Cost GL Account will be used to account for the difference between standard and actual cost.
  • Receiving in process accounting transactions include two transactions to the Receive in process account. When the receiver is posted to accounting, both of these lines are reversed and placed into the asset account and the offset account.