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LILAC Document Help

Standard Cost

Standard Cost, from the Stock Account document, is used to record a static Cost of Goods - sold, and produced. The alternative costing method Average Cost, values inventory at a moving average cost: quantity / purchase cost over time.

1. Value Stock at predetermined cost.
2. Determine profit margin based on predetermined cost.
3. Operators update Standard Costs periodically / as necessary.

In the event of Purchase Order processing variances, ie the purchasing cost for a product do not match the Standard Cost for a product, the variance is recorded against TRADING VARIATIONS PURCHASE, which maintains a balance reflecting the difference between Purchase Invoice Cost and Standard Cost, for a product.

Current Cost is the default cost used in a Purchase Order. The Current Cost is the last cost price invoiced for a product. Again, in the context of purchasing to the invoice stage, the difference between the purchase cost (used in a Purchase Order) and Standard Cost, are posted to TRADING VARIATIONS PURCHASE.

1. The generation of a Tax Invoice credits (relieves) INVENTORY Stock Product at Standard Cost, and debits TRADING COST OF SALE at the Standard Cost amount.

Using Standard Cost will generate Average Cost figures with respect to updates made to the Standard Cost, followed by Purchase Order Processing over time. Standard Cost is used unless company data is set to Use Actual Landed Cost.