Standard cost should only be used if your accountant has directed you to do so. The main use of standard cost is for manufacturing and other businesses where the value of a product is not directly related to a bill from a vendor.
All stock-on-hand is valued at the standard cost established for the product. The standard cost may be changed at any time by entering a balance adjustment transaction, which is effective from time-of-entry and cannot be backdated.
When stock-on-hand is zero (meaning you haven’t received inventory for the product yet), standard cost can be setup in the Product Information window, which when set will allow you to only receive the specific product at the fixed (standard) cost you defined.
Entering standard cost in Product Information window:
Defining the standard cost from this window can only be done if you are entering a product, in which the stock-on-hand is currently zero.
If you are changing the standard cost for a existing product with stock-on-hand, do a balance adjustment (as described in the next section).
- Select Inventory > Product Information to open the Product Information window and create the new product that will have the standard cost.
Click the New Button to begin entering all necessary information for the new product.
- In the Inventory tab, select a Control Type from the drop down list and from the Cost Method drop down list select Standard.
- Remain in the Inventory tab and click the ‘Add Warehouse’ button to add a new warehouse.To the right, Management and Location tabs will appear.
- Within the Management tab in the Costs section, enter your standard cost into the Std field.
This is now the fixed cost at which you will receive this product into inventory.
Changing an existing standard cost with a balance adjustment:
If a standard cost has already been set and stock exists for the product, the only way you can change this cost is by performing a balance adjustment.
- Select Inventory > Inventory Balance Adjustment.
- Click the New Button. A new transaction will automatically be created in the session.
- Enter all necessary information into the header fields.Make sure that from the Warehouse field drop down list (in the header), you select the appropriate warehouse that you are performing the transaction for.
- Click the Save button.
Select the products, in which you want to modify the existing standard cost
- In the data grid, click inside the Product ID field.
Then click the Lookup button.
- From the Find Product window, select the product that you need to change the standard cost for.
- Remain in the same data grid line and in the Unit Cost field, change the current cost to the desired standard cost. This will adjust the amount in the Value field.
- Repeat steps 1-3 for each product, in which you want to change the standard cost.
- When you are done, review the products on the screen and save the transaction. Your inventory in the database has not been posted yet.
- To post your inventory transaction, click the Post button. A pop-up window will appear asking if you want to post your inventory transaction.
- Click Yes to post (update) the inventory. Click No to stop the posting process.
- The Inventory Balance Adjustments-Transactions Report window will open when you have successfully posted your inventory transaction.
This report can also be accessed later, through Inventory > Inventory Reports > Transactions > Balance Adjustments.
- Select the appropriate button, to print or preview the report for the products you just changed the standard cost for.