Inventory Costing -Standard Costing

 

Inventory Costing

STANDARD COSTING

• Oracle Cost Management is a full absorption, perpetual and periodic cost system that automatically costs and values all inventory, work in process, and purchasing transactions.
•  It supports all perpetual costing methods including 
• Standard costing,
• Average costing, 
• FIFO costing, 
• And LIFO costing.

Standard costing:

• Under standard costing, the value of inventory is determined using the material and material overhead standard costs of each inventory item. If you use Bills of Material, Inventory maintains the standard cost by cost element (material, material overhead, resource, outside processing, and overhead).

Now Let's Define Costing,

Go to Org Parameter in Costing tab define Costing Method as Standard

 

Check whether Cost Manger is Active or not

Go to Inv->Setup->Transaction->Interface Managers

To define Standard Cost we should have Sub-Elements

• Overhead
• Material Overhead
• Material Cost
• Resource Cost

Let's define them go to

Inv->Setup->Costs->Sub-Elements->Material

Define Material Overhead 

Define Overhead in the same Screen

• Standard Cost is not defined directly initially we define it as Pending to make changes 
• We take that Pending Cost and Freeze it Once it is Freeze than we can't make changes to it and that is Final Cost

 

Now create item and In costing tab enable Costing and  Inventory Asset Value

Save the Item and add some stock to it

Now give cost to the Item

Inv->Cost->Item Cost take new

             Enter the item, select cost type as Pending then click on Cost and give the Sub-elements and enter the cost for item

Now we need to run the program called Update Standard Cost

Now check the Cost of the item

Inv->Cost->Item Cost search with the item