Production cost and standard cost

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I'm involved in a Production Company that uses Standard cost. Sometimes we end up with a co-Product. The Production order was started in order to produce Product A (Standard Cost USD 5). Co-Product IA’ Standard Cost is USD 1.

Let's say we produce 100 linear meters of Product A and 10 linear meters of Product IA.

We have been told that Microsoft divides the total cost according to standard cost, so if the total Production cost is 10 % lower (weighted average) than Standard Cost, Product A would have a cost of USD 4,50 and the IA Product USD 0,90.

We would like that Product A and IA had the same Production cost before Standard Cost adjustment.

We would then be able to separate the write-down of the IA product into a dedicated financial account.

Is that possible?

Dag Slørdahl

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Well, I guess the trick is, that to produce 100 Meters for A and 10 Meters for IA, you need material and labor for 110 Meters, so your calculation should be 500 USD for A (5 per meter) and 50 USD for IA (again 5 per meter) - right? That is how AX works.

I assume you are using formulas and batch orders? To calculate a standard cost for the Main- and the Co-product you can use a specific formula and define standard quantity relation and the cost allocation in that formula as well (could be 50% both). WIth that both Main product and Co-Product could have the same standard cost. The variances will then be created based on the actual Batch orders and the reported quantities of main and co-product and the defined cost allocation in the formula.

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