Standard costing allows inventory records to be stored at a set cost per item, regardless of the price paid for the item. All transactions affecting the inventory are at processed at this set cost. Any variance between the standard cost and price paid for the item is posted to a variance account when the purchase invoice is activated. An additional variation will break down the variance and post to further variance accounts as required - FX Variance, Freight Variance and Duty Variance.
Standard costing is applied on an individual part number basis as required - i.e. there can be a mixture of normal and standard costing across the inventory.
Standard costing impacts the General Ledger in the following manner.
purchase orders are posted to the General Ledger at the actual ordered cost
receival slips reverses out the expected accounts, where required, at the actual cost. The Delivered Asset is calculated at the current standard cost, the liability at the receiving slip actual price and the variance is calculated as the difference between the two
purchase invoices reverses out the received details, including the variance. Posting to the inventory account is at the standard cost that was applied on the receiving slip, creditors at actual invoiced price and the variance calculated as the difference between the two
Use Cost of Goods Ledger = Yes
Use Rounding = No
Post Purchase Tax = No
Use Foreign Exchange = No
Use Standard Costing = Yes
BreakDownVariance=No
Use Warehouse Masking = No
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