Standard cost

[former_member216878]

Hi All,

Below are my queries:

1. What will be the impact on standard cost of Finished material if change of mov avg price in between of the month  for Raw materials. Can we recalculate standard cost of material any time between the period once it is released on 1st day of the month.

2. Inventory valuation at the period end but with next month std price. For example in the beginning of Nov month standard cost of a material is Rs 10 and stock qty is 100 then inventory valuation will be rs 1000,when we release std cost for next  month on 1st Dec let say Rs 12 and stock is same 100 qty then inventory valuation will be Rs 1200 as on 1st dec but is there any way we can reevaluate inventory of 100 qty with rs 12 on 31st Nov.

Please provide some clarity on above two points.

Regards

Nitisha

[rajneesh_saxena]

Hi Nitisha

For point number 1, I agree with Kamal Sir. There will be no change in released std cost of FG. You will get a price difference entry for this RM in your FI. For example you change RM price from Rs 10/- to Rs 12/- per unit on 15th Nov. and on that date you have a stock of 100 units. A FI entry for difference of Rs. 200/-  (12-10x100) will be generated.

Secondly, it is not recommended to change your std cost between the period because if material movements have happened on old std cost, it may impact your analysis and other relevant operations but if it is utmost necessary, you can delete your std cost using CKR1 and re-cost your FGs.

Regards

Rajneesh

[bhaskar_basam]

Hi Nitisha,

I agree with Rajneesh Sir, it is not advisable to change the cost estimate in between the period, that will impact the analysis.

If you want to re-valuate your inventory and match up with the market price per AS-2 standards then consider running cost estimate at end of the period instead of running at the beginning with the validity till next month end date, as you know there won't be major goods movement between last day or previous month and first day of next month, it won't impact prices of FG even if you run on last day or first day. System will re-valuate your available FG with the MAP of raw materials as on last date, but it won't re-valuate your WIP and COGS.

If you want to get the actual cost and re-valuate your WIP and inventory with the actual cost then you need to implement Material ledger / Actual costing.

Regards

Bhaskar

[kamalkumar_biswas2]

Hi Nitisha

1. What will be the impact on standard cost of Finished material if change of mov avg price in between of the month  for Raw materials. Can we recalculate standard cost of material any time between the period once it is released on 1st day of the month.

...... No change in released standard cost for that period but Raw mat inventory will be changed and PRD a/c will be generated. Once standard cost is released for a period you can't do another released for that period

2. Inventory valuation at the period end but with next month std price. For example in the beginning of Nov month standard cost of a material is Rs 10 and stock qty is 100 then inventory valuation will be rs 1000,when we release std cost for next  month on 1st Dec let say Rs 12 and stock is same 100 qty then inventory valuation will be Rs 1200 as on 1st dec but is there any way we can reevaluate inventory of 100 qty with rs 12 on 31st Nov.

........ Inventory of Fin goods will remain as per released standard cost of Fin goods for that period and in the next month when you will release new standard cost of Fif goods valuation will change as per new std cost

Kamal