Standard Costing and Transactions

When you use the Standard Costing feature, transactions you enter in NetSuite include line-item data to process standard costing variances.

Please note the following:

• The sum of the cost across cost categories for an item generates the total cost of an item.

• Purchase price variances can post on any “more-on-hand” transactions, including purchase receipts and transfer order receipts.

• When transactions are processed using Standard Costing, the item cost is valued at a per-cost category level for non-lot numbered and non-serial numbered items.

  • For lot numbered items, inventory is valued at a per cost category, lot number combination.

  • For serial numbered items, inventory is valued at a per cost category, serial number combination.

The following details ways transaction data is processed with Standard Costing enabled. The examples below refer to Item A, which has a standard cost of $3 and an actual cost of $5 on transactions. The resulting general ledger postings are shown in tables as below:

Purchase Order Receipts

• The inventory asset value is always set at standard cost.

• A variance is generated for any difference between the actual cost shown on the order and the standard cost.

Account	Amount
Asset	$3	standard cost
Purchase Price Variance	$2	difference in standard and actual cost
Accrued Purchases	$ -5	actual cost

Purchase Order Receipts With Landed Cost

• The inventory asset value is always set at standard cost.

• A variance is generated for any difference between the actual cost shown on the order and the standard cost.

  The variance is not divided into individual cost categories.

Transfer Order Receipts

A Gain/Loss value is generated based on the difference between the transfer price and standard cost at the source location. A variance is generated for any difference between the standard cost at the origination and destination locations.

Account	Amount
Asset	$3	standard cost
Purchase Price Variance	$2	difference in standard and actual cost
In Transit	$ -5	loss on the item fulfillment record Note: The Gain/Loss account is recorded by the source location that transferred the item to the destination location. This account is reflected in the GL impact of Item Fulfillment because the In Transit account is established at fulfillment.

Inventory Transfer

A variance is generated for any difference between the standard cost at the origination and destination locations.

Account	Amount
Asset (From Location)	$ -2	standard cost of location B
Asset (To Location)	$5	standard cost of location A
Purchase Price Variance	$ -3

Assembly Build

Cost variances are divided into different cost categories and variance types. For more information, see Assembly Build Production Cost Variances.

Account	Amount
Asset (Assembly)	$3	standard cost
Asset (Component)	$ -5	standard
Variances	$2

Assembly Unbuild

Any difference between the standard and actual cost is posted to the Unbuild Variance account. For information about setting this account for items, see Setting Up Item Records for Standard Costing.

Account	Amount
Asset (Assembly)	$ -3	standard/actual/average cost
Asset (Component)	$5	standard
Unbuild Variances	$ -2

Related Topics

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

Revalue Standard Cost Inventory

Assembly Build Production Cost Variances

Standard Costing FAQ

Standard Costing Reporting

Standard Costing

General Notices