Production - Cost accounting - Standard cost

(0) Share

Report

Posted on by Community Member

Dear all,

I'm new with production and cost accounting. Could you help to advise some concerns related to Production, Cost accounting using Standard cost in AX 2012?

Currently, we are using standard cost and using inventory transactions to record FG and issue RM during our daily business process. Using standard cost, there is a difference between actual expenses and standard cost we setup. So at the month end, we allocate the variances via GL ledger journals.

In near future, we would like to keep standard cost and apply Production module and Cost accounting module. So my concerns are:

- In production module, the variance mean comes from: Actual consumption vs estimated consumption by formula, difference in batch size, co-products.

-> So these variance will be record when we end the batch order and will be allocated automatically base on the setup? And we no need to consider about this?

-> Cause we keep the standard cost concept, so could the variance between actual expenses and standard cost could also be allocated via Cost accounting module?

- We also would like to use costing sheet in Production module.

-> As my understanding, standard cost could also be activate via costing sheet?

-> And the direct cost in costing sheet comes from routes, so in case we need to revise the standard cost every month so we also need to revise the cost for each route every month?

Thank you in advance,

Best regards,

Thu Ngo,

*This post is locked for comments

I have the same question (0)

All responses (5)

Answers (0)

Sort by

André Arnaud de Cal... 304,712 Super User 2026 Season 1 on at

Like (1)

Report
Copy link

Link copied!

Hi Thu,

This is a very broad question which would normally explained by consultants. To help you a bit:

- Why are you posting allocations via GL? When calculating/ending a production order, the variances are already posted.

- BOM calculation, Production BOM calculation and real consumption can have variances. The actual consumption is leading for the actual cost which would cause some variance postings if it does not equal standard cost.

- Costing sheet is a way to be able to do BOM calculations and also determine overhead to be included in production costs. It is not a way to activate a cost price. It will be able to do a certain calculation which could be a source for determine a standard cost.

Was this reply helpful? Yes No
Community Member on at

Like (0)

Report
Copy link

Link copied!

Hi André,

Thank you for your kind reply.

The reason why we need to post the allocation is because our management require that the new standard cost for the next month is the actual cost of the current month.

-> So currently, we use the temp account to reflect the difference and at the month-end, we allocate the temp account into WIP, COGS and on-hand inventory. And we also want to keep this practice after applying production and cost accounting.

So could help me explain:

1. When we end the batch order, is the variance will be calculated based on the standard cost and the WIP actual (included RW, Direct and indirect cost).

Will the transaction be as below?

Dr Finished good.

Dr/Cr Variance

Cr WIP actual

2. Base on the manual from MS, in production module, the variance comes from: Actual consumption vs estimated consumption by formula, difference in batch size, co-products.

-> But i really don't understand how AX could calculate this difference, because when the batch order was ended, all of the previous transactions (picking list, consumed entries,..) will be reversed and the actual WIP will be recorded. I think the difference here (if any) will come from the standard cost of the item and the WIP actual?

3. As your explanation above, the costing sheet is a source to determine a standard cost. So is it possible when the cost of the item calculated by costing sheet is different with it's standard cost? If this happen, how AX could handle the difference?

I would very appreciated if you could help me clarify or recommend some materials i could refer.

Best regards,

Thu Ngo,

Was this reply helpful? Yes No
André Arnaud de Cal... 304,712 Super User 2026 Season 1 on at

Like (1)

Report
Copy link

Link copied!

Hi Thu,

There is a white paper with an example for the costing sheet: www.microsoft.com/.../details.aspx

Was this reply helpful? Yes No
Suggested answer

guk1964 10,888 on at

Like (0)

Report
Copy link

Link copied!

Conceptually this is not the way to use Standard cost. Its philosophic decision that Sales get a known fixed cost, and that supply chain team have to manage the cost and try to beat the standard ,and to have clearer visibility of variances good and so as to find ways to better manage the business.

Do you want to pass on gains to sales to win more business or to drop the saving straight to the bottom line.

Will you be competitive if you buy and make badly and always pass the cost overruns to sales to get higher prices?

Your standard should be set as some midpoint between current cost and where you expect it to be in a year's time and that should accommodate variances - for the first half of the year you can expect to make small gains and in the second half corresponding losses.

If you are going to pass on the variances by period to the sales team then use average.

Every time you change standard you are revaluing your stock and auditors will dig into how that reflects in your accounts. Strangely they don't have the same concern about changing averages.

In other words either your standard is a standard, or it isn't.

the necessary conditions for standard and weighted are the same its more about management philosophy and how you make decisions.

Was this reply helpful? Yes No
Community Member on at

Like (0)

Report
Copy link

Link copied!

Hi André,

I have checked. It is very helpful. Thank you so much.

Best regards,

Thu Ngo,

Was this reply helpful? Yes No