Standard Costing Setup

To implement standard costing in the system, use the following procedure:

Open the Inventory Parameters form.
In the Cost Type check box, select Standard.
This selection indicates that all inventory reports and transaction posting to the G/L are to use the item's standard cost.

This field is also maintained on the Items form, the Cost Type field of which defaults from the Cost Type field of the lnventory Parameters form when adding new items.
On the Items form, General tab for all items, select the Cost Method.
For standard costing, the system uses the Cost Method field on the Items form only to determine what material cost to post to a job to which the item is issued.
Open the Shop Floor Control Parameters form.
On the Jobs tab, in the Calculate Variances Against group box, select Standard.
Determine the standard cost of each item.
Because the Standard Unit Cost field cannot be updated, the standard cost must be established in a different way.
- For purchased parts: On the Item Costs form, the Cost Maint tab, Purchased Current Unit Cost group box, enter the standard cost into the Material field.
  The Roll Current Unit Cost to Standard Cost utility rolls the purchased current cost to the standard cost when you save the form.
- For manufactured parts: On the Item Costs form, the Cost Maint tab, Manufactured Current Unit Cost group box, enter the standard cost into the Material Cost field.
  The Roll Current Unit Cost to Standard Cost utility rolls the purchased current cost to the standard cost when you save the form.
After establishing all routings and bills of material that are to be standard for manufactured items, post the current cost of the manufactured item to the Manufactured Current Unit Cost field by running the Current BOM Cost Roll Up utility. You can then roll this field to the Standard Unit Cost using the Roll Current Unit Cost to Standard Cost utility. Performing this utility also copies the current routing and materials to the standard routing and materials.
Enter the required General Ledger account numbers in Product Code, Parameter Defaults, Department, and Distribution Accounts files. These account numbers are used for the posting of inventory transactions to the G/L inventory distribution journal.

The account numbers to enter for costing purposes in the various codes and parameters are as follows:

Product Codes - WIP Tab

WIP Material

WIP Labor

WIP Fixed Overhead

WIP Variable Overhead

WIP Outside Services

Standard Bill Of Material Costing

Efficiency Factor = WC efficiency/100

Setup Cost/Unit = (total setup hrs * OPERATIONS setup rate /lotsize) / efficiency factor

Run Cost/Unit = (per unit run hrs * OPERATIONS run rate / efficiency factor

Material Cost = QTY per parent * Std BOM Unit Cost / (1.00 - Scrap %)

Labor Fixed or Variable Overhead = OPERATIONS [Fix Var] OH Rate * [(Total Setup Hrs/Lot Size) + Run Hrs Per Piece]/Efficiency Factor

Material Fixed or Variable Overhead = MATERIALS [Fix Var] OH Rate * [(QTY Per Parent * Std BOM Unit Cost]/1.00-Scrap %

Machine Fixed or Variable Overhead = OPERATIONS [Fix Var] OH Rate [Run Hrs Per Piece]/Efficiency

Fixed Overhead = Labor Fixed Overhead + Material Fixed Overhead + Machine Fixed Overhead

Variable Overhead = Labor Variable Overhead + Material Variable Overhead + Machine Variable Overhead

Product Codes - Ovhd Var Tab

Only one account is needed for each of the following:

Fixed Material Overhead Applied

Variable Material Overhead Applied

Fixed Labor Ovhd Usage

Variable Labor Overhead Usage

Fixed Material Overhead Usage

Variable Material Overhead Usage

Fixed Machine Overhead Usage

Variable Machine Overhead Usage

NOTE: The Fixed Material Overhead Applied and the Variable Material Overhead Applied accounts are required only when basing overhead on job material issues.

Product Codes - Misc Tab

Cost Budget

Product Code - Variance

Purchase Cost

Material Usage

Labor Rate

Labor Usage

Routing

Department

Fixed Overhead Applied Account

Variable Overhead Applied Account

Direct Labor Applied Account

Work Center - Costing

Fix Mach Ovhd Applied Account

Var Mach Ovh Applied Account

Distribution Accounts - Sales/Cost of Goods Sold

COGS Material

COGS Labor

COGS Fovhd

COGS Vovhd

COGS Outside Services

After the completion of these steps, you are ready to start processing manufacturing transactions.