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.

4 Comments

Kenneth Ching April 4, 2019 at 2:09 pm

Is there a requirement the Item Standard Cost must has a corresponding Inventory Location?

The Inventory Item Standard Cost should be set at the Global level or Inventory Location Level?

Thank you!

Kenneth

Reply
    Megan Samples April 19, 2019 at 1:03 pm

    If you expect standard costs to vary based on location, you can establish multiple costs versions to reflect this.
    Navigate to Lists > Accounting > Standard Cost Versions > New in order to set up a new cost version related to a particular location.

    Reply
Marlon September 19, 2019 at 4:09 am

Hi Laura,
Is there a standard report you can run to get the total cost of your BOM?
Thanks
Marlon

Reply
    Megan Samples October 11, 2019 at 10:59 am

    There is the Costed BOM Inquiry you can run to examine the standard cost breakdown of an assembly. The Costed BOM Inquiry report displays individual and aggregated assembly costs enabling you to view how different cost components roll up to an assembly item based on the Bill of Materials. This includes material and conversion costs (labor and machine costs and their overheads). To access, you can navigate to Transactions > Manufacturing > Costed Bill of Materials Inquiry and select the Assembly from there. For additional detail, see Suite Answers article “Costed Bill of Materials (BOM) Inquiry” Answer ID: 31715.

    Reply

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