Standard cost and overhead for purchased parts

Business Central/NAV User Forum
1

Hi

I don’t know how to treat overhead on purchased saleable items (most of our sale items are manufactured). If an item costs £4 and the overhead is 25%, do I enter the standard cost as £4? If so there is a Price Variance every time we purchase that item. But if I enter the cost as £5 there is a problem when I roll Last Direct Cost to Standard Cost at Year End and Standard cost is not rolled up correctly. What is the correct process as a starting point? We use NAV 2009.

Many thanks

2

If it is a purchase item, why you want to use standard costing? Why not average or FIFO?

3

Our costing method is standard costing for all items. We wouldn’t want to mix FIFO and standard.

Regards

Richard

4

Would you like to record overhead cost ??

5

Yes, we record the cost through the routine Update Overhead Rate. This works on all items that have a Production Order, but not on Purchased parts.