Supported Cost Methods

The cost methods used to cost your transactions are configured using the Manage Cost Profiles task in the Setup and Maintenance work area. You can use multiple cost methods in your cost profiles.

This table describes the supported cost methods.

Cost Method	Description
Standard	Inventory is valued at a predetermined standard value. You track variances for the difference between the standard cost and the actual transaction cost, and you periodically update the standard cost to bring it in line with actual costs.
Actual	Tracks the actual cost of each receipt into inventory. When depleting inventory, the processor identifies the receipts that are consumed to satisfy the depletion, and assigns the associated receipt costs to the depletion.
Perpetual Average	The average cost of an item, derived by continually averaging its valuation after each incoming transaction. The average cost of an item is the sum of the debits and credits in the inventory general ledger balance, divided by the on-hand quantity.
Periodic Average	The periodic average cost method values inventory by including all the expenses and invoices for a period and other adjustments that are known only at the end of the period. The periodic average cost of an item is the average cost for the item in a given period for a cost organization, cost book, and valuation unit combination.