Standard Costing Overview:
Standard Costing in NetSuite provides a systematic approach to tracking standard costs for items, allowing organizations to monitor variances between expected and actual costs. This method is particularly valuable for manufacturers and wholesale distributors, offering insights into inventory costing issues and enabling corrective actions.
Key Features of Standard Costing:
When employing the Standard Costing method, the system disregards factors such as purchase price, last purchase price, average cost, and landed cost. Instead, it focuses solely on the default cost specified in the item record. Variances are categorized into purchase price variances for procurement and quantity variances for assembly-build transactions.
Identifying Variances:
Standard Costing not only reveals variances but also aids in understanding the reasons behind cost discrepancies. Variances can stem from changes in material costs or alterations in the quantity of materials used. Purchase price variances occur during procurement, while production quantity and cost variances arise during production. Unbuilt variances, on the other hand, occur during the disassembly process.
