Standard Costing Setup in NetSuite

By - January 28, 2019

Standard costing helps identify cost-saving opportunities in manufacturing and procurement by allowing users to track cost variances by category.

Required Features:

  • Enable Standard Costing (Items & Inventory)
  • Enable Multilocation inventory
  • Disable “Use item cost as transfer price” (Accounting Preferences)

Set Up

Define Cost Categories for inventory

  • Allows users to review variance by category (e.g. Labor, Material)
  • To create a new cost category navigate to Setup > Accounting > Accounting List
    • Type of inventory being used (Material and Service Categories behave the same way)
      • Inventory Items can only have one material cost category
      • Service Items can only have one service cost category
      • Assembly items can have more than one cost category

Define Cost Version

  • Allows the user to store inventory item costs in different versions based on assigned effective dates (e.g. different standard costs based on different Quarters of the year)
  • To create new cost versions navigate to List > Accounting > Accounting Lists

Item Record Setup

  • Purchasing/Inventory tab > select Costing Method = Standard
  • Select Cost Category
  • Select Variance Accounts – GL impact of inventory transactions will post to these accounts
    • Production Price Variance Account
    • Production Quantity Variance Account
    • Purchase Price Variance Account
  • Item record will show a historical list of standard costs and variances

Set Planned Standard Cost Record for Inventory Items based on Cost Version

  • Navigate to Lists > Accounting > Planned Standard Costs

Run Cost rollup program (Optional for calculating the cost of assembly items)

  • Calculate assembly item cost based on the cost of the individual components
  • Navigate to Lists > Accounting > Cost rollup

Run revalue Standard Cost inventory to set a standard cost

  • List > Accounting > Revalue standard cost inventory
  • Sets new standard cost based on standard cost versions per location
  • Reviews/revalues inventory based on standard cost changes

For more information on this topic or others related to NetSuite, contact RSM at netsuite@rsmus.com or by phone at 855.437.7202.

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