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Standard Cost on Inventoried Items

  • 1.  Standard Cost on Inventoried Items

    GOLD CONTRIBUTOR
    Posted 11 days ago
    ​​Hello,

    When changing standard costs in GP we click Utilities/Change Item Standard Cost. Should I be entering the standard cost based on the main unit of measure or based off the purchased UOM.

    Ex. 5LB bag of Blueberries is the purchased UOM but the way we use the item is at the LB UOM.

    In the Change Item Standard Cost screen should I be entering the price of the 5LB bag or the price/LB?

    Thanks!



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    Amber Schmoll
    Accounting Supervisor
    Milk Source LLC
    Kaukauna WI
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  • 2.  RE: Standard Cost on Inventoried Items

    TOP CONTRIBUTOR
    Posted 10 days ago
    @Amber Schmoll do you have your UOM Schedule setup to do a conversion from the one unit of 5lbs to 1lb usage?
    When we update costs, we record it as our purchasing UOM. It then converts that costing in the BOMs as we consume. Ex - we buy steel wire in lbs, but consume in inches. Our costing is based on the pound price.

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    Aleiha Hanson
    Royal Basket Trucks, Inc - IT Manager
    GPUG Milwaukee WI Chapter Leader
    ahanson@royal-basket.com
    ------------------------------



  • 3.  RE: Standard Cost on Inventoried Items

    GOLD CONTRIBUTOR
    Posted 10 days ago
    @Aleiha Hanson ​if I'm understanding you correctly the costing I put in should be based off the Purchase UOM? I do have my tables setup in the background to convert the 5lbs to 1lb in my example. Thanks!

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    Amber Schmoll
    Accounting Supervisor
    Milk Source LLC
    Kaukauna WI
    ------------------------------



  • 4.  RE: Standard Cost on Inventoried Items

    TOP CONTRIBUTOR
    Posted 10 days ago
    Yes, that's what we do and it has worked well for us.

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    Aleiha Hanson
    Royal Basket Trucks, Inc - IT Manager
    GPUG Milwaukee WI Chapter Leader
    ahanson@royal-basket.com
    ------------------------------



  • 5.  RE: Standard Cost on Inventoried Items

    SILVER CONTRIBUTOR
    Posted 10 days ago
    Your standard cost should be based on on how you stock and consume the inventory, the base unit of measure, in this case LB UoM. Great Plains allows you to have multiple purchase units of measure, For example, today you buy in 5LB Bag size. Tomorrow, you may buy in a 10lb  package size or 100LB Crate for price advantage.

    However, you are consuming always at the LB UoM. Where your purchase UoM is different that your base UoM, you do need to set-up the purchase UoM in the Item Purchasing Options Maintenance Card for on the Inventory > Cards.  Native GP will automatically convert inventory at receipt to the base UoM and handle the cost conversion properly as well.  There is not need for a separate conversion utility.



    Basing your standard cost on the purchase unit measure will result in overstating financial consumption of your inventory and understate your inventory value at standard cost. Your cost roll-ups for your finished goods, will overstate you standard cost of the finished good.

    Hope this helps.
    regards,

    ------------------------------
    Keith Paul
    VP Business Management Systems
    UNICOM Engineering, Inc.
    Plano TX
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  • 6.  RE: Standard Cost on Inventoried Items

    TOP CONTRIBUTOR
    Posted 10 days ago
    Be careful. When you use the IV Utilities Change Item Standard Costs the unit cost is the Base Unit Cost. This may or may not be the Purchasing UofM or the Selling UofM.
    Check your Item Card as it holds the Standard Cost for the Base UofM which is displayed on the UofM Schedule.
    This Base gets changed and the rest are calculated

    In the Utilities you see the Base UofM Cost.



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    Thaddeus Suter
    Retus, Inc
    HELOTES TX
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  • 7.  RE: Standard Cost on Inventoried Items

    TOP CONTRIBUTOR
    Posted 10 days ago
    I forgot the Purch U of M. Here it is. Not necessarily = the Base UofM



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    Thaddeus Suter
    Retus, Inc
    HELOTES TX
    ------------------------------