Standard Costing Setup in NetSuite

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.

Laura Moyer

Laura is a consulting leader that has over 7 years of experience leveraging NetSuite’s technology to help clients digitally transform their business to catalyze business growth and success. As a NetSuite certified ERP Consultant, Laura has experience designing improved business processes and implementing NetSuite ERP for clients in all industries, with her focus on the nonprofit and consumer products industries.

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