Enable Standard costing feature : Go to Setup > Company > Setup Tasks > Enable Features >Items & Inventory subtab > Inventory box is checked > Standard Costing box is checked > Save
Create cost categories : the classification or grouping of similar or related costs for purposes of reporting, determination of cost limitations, and determination of rates
Setup > Accounting > Setup Tasks > Accounting Lists > New > Cost Category
Enter name, Cost Type, Expense Account, Expense Category > Save
Setting up Item Records : Lists > Accounting > Items > New > Click edit on the item record > Purchase/Inventory subtab > Costing method given Standard > Fill Cost Category > In the standard cost field give cost per location, in Purchase Price Variance Account field select an Account to post purchase transaction variance, Gain/Loss Account field select an Account to post Inventory transfer variance > Save
Defining Cost Versions : We need to create cost versions if we expecting we want to change standard costs over time or based on locations
Lists > Accounting > Standard Cost Versions > New > Name for cost version > Location fields, select locations as per needs > Inventory standard cost field, Select any standard cost for the Inventory > Save
Creating Planned Standard Costs Records : Manual standard cost records – Lists > Accounting > Planned Standard Costs > New
Rolling up Standard costs : It calculates the total fixed cost of assembly and sub-assembly items based on data entered on the planned standard cost record
Lists > Accounting > Planned Standard Cost Rollup
Revaluation of Inventory : Revaluation process updates the standard cost of items with effective date. It can be done as bulk process or entering new cost manually