Standard Costs

Standard costs are the basis for inventory valuation, gross margin calculation, and cost of sales statistics.  These costs are typically set at the beginning of a fiscal year and remain frozen throughout the year.  They may, however, be maintained at any time.  Standard costs may be established by rolling the current or simulated cost values into the standard costs.  Standard costs can also be maintained independently from current costs, using the bill of material in effect at the time of costing, the routing information, and the standard costs defined in Design Engineering and Manufacturing Engineering. 

Standard costs are the most important costs that you maintain.  However, it is actually the accounting, or frozen, costs that are used by the Inventory Accounting module to value inventory.  Through the Inventory Accounting module, you "freeze" standard costs at a particular moment in time and copy them into the corresponding accounting cost fields.  After the accounting costs are created, you can update the standard costs without affecting inventory valuation.  This allows you to enter standard cost changes for the next period without affecting how transactions from previous periods are valued.  For more information about accounting costs, refer to the Inventory Accounting User Manual.