Revalue Standard Cost Inventory
You can enter a transaction to revalue your standard cost inventory for each planned standard cost record. This revaluation process does the following:
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Sets the standard cost for items as of the specified effective date
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Calculates the current inventory value based on the current standard cost
Set Current Standard Cost
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First, the revaluation transaction sets the standard cost of an item.
This process identifies in the system which cost and cost category will be used on transactions for this item as of the effective date.
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After the revaluation is performed, transactions entered use the newly established standard cost for items.
For example, the current cost on record for the item Assembly Widget A is $20. You previously created a planned standard cost record for Widget A that is associated with cost version Q3 2020. It shows the standard cost of Widget A at $30. Now, you want to push that cost to production so it is used in costing calculations as of July 1, 2021. To do so, enter an inventory cost revaluation.
Calculate Inventory Value
An inventory cost revaluation transaction sets the value of on-hand inventory. This value is calculated as:
On-hand value = (standard cost * current quantity on hand)
Therefore, the current standard cost of Item A is set at $30 and the on-hand count is 100 units. The current value of Item A stock on hand is ($30 * 100) = $3000.
For assemblies, this is calculated as follows:
On-hand value per cost component = (component standard cost * current quantity on hand)
After the revaluation is performed, inventory values on records are current and more accurate.
When you enter an inventory revaluation, the result will be blank for any item with no quantity on hand.
Related Topics
- Process a Revaluation Transaction
- Revaluation and Multi-Book Accounting
- 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
- Standard Costing and Transactions
- Assembly Build Production Cost Variances
- Standard Costing FAQ
- Standard Costing Reporting
- Standard Costing