Standard Costs Maintenance Overview

Use the standard cost maintenance functions to maintain standard costs. Standard costs may not always be accurate. You change them at infrequent intervals with the intention of creating a standard cost that you can “live with” over a long period of time where the actual costs may be fluctuating. If you are using standard costing as an inventory costing method, an important feature of the standard cost maintenance functions is the ability to post journal entries to GL for changes to standard costs of inventory and do so on a batch basis.

Note: If you are using a costing method other than standard costing, these functions do not make any entries into GL, but enable you to maintain standard costs easily and accurately.

The standard costs maintenance menu contains the following selections:

Cost Variance Report

When adjusting standard cost variances, use the Cost Variance Report to compare the current unit costs of different components of a BOM, as well as the BOM cost, to the existing costs in Inventory. There are several parts to this report.

Update Standard Costs

If you found costs that need adjustment when reviewing the Cost Variance Report, use the Update Standard Cost function to make those adjustments. Since the Traverse Inventory system does not provide a utility to quickly change and record standard costs adjustments, you must make those changes here using this function. You can move quickly through the Inventory system, changing standard costs of component items where needed.

Roll Up Standard Costs

Once your component costs are accurate and you have posted transactions to Inventory, you can roll up the existing BOMs. This process adds up the elements of one or all BOMs, recalculating material, labor, overhead, and subcontracting costs. The standard cost adjustments required for each BOM are automatically created and written to the transaction file using this function. Later, you can post these costs to GL. Although you cannot create new transactions for assemblies, you can edit or view generated transactions created by the Roll Up Standard Costs function. All of the entries are then written to the standard costs adjustments table and later appear on the Standard Costs Adjustments Report. You can then post these costs to GL.

Standard Cost Adjustment Report

Once you finish rolling up standard costs, print the Standard Cost Adjustment report. This report shows the cost update information (if you are using standard costing) and journal entries, which are created in GL, and is your last chance to review the data before you post it to GL and Inventory.

Post Standard Cost Adjustments

Use this function to update Inventory standard costs and post entries to GL. A credit is made to standard cost adjustments as defined in the Default - GL Account section of the Business Rules screen, and a debit is made to the individual asset account for items defined in the Inventory database (these transactions could be reversed if there were a decrease in the standard cost). The Inventory Standard Cost field in the Inventory database also changes when you post.