# Standard Cost calculation

Hi all!

I have a customer ( distributor) who actaully uses Standard Cost method in its old system and he wants to implement that cost into Nav5 also which I dont really like.

However , he wants to be able to have the system calculate the standard cost per item base on several differents costs types suich as overseas costs, freight costs, vendor first cost, custom costs , etc… This is needed also to calculate or give the proper price when the product will be sold.

What’s is the proper way to do that? Do I have to customise that part or can I use Production Bom for that? any ideas???

Thanks

You will need to customise it. Get the customers inputs into making the standard cost to calcualte it, although you will need to consider how this is then applied to the item. Using a BOM will not work, the throry of standard costing is to take a number of calculated variables to make the cost. Things like freight costs, etc will be proportional so an item charge is a possibility, but in reality they will be bringing other cost elements in to define the standard cost - I would guess. In most cases like this it is a task done outside the system based on set and moving criteria and then applied to the system, the reason being that some of the elements can be less than solid. However there is no reason why it could not be brought in, but it would be a lot of work depending upon the requirements of the business.

What do you think of changing the way that item vendor catalog looks so that I create all those 4 charges with the purchas eprice field for the vendor. I then added those costs to the purchase price which will then update the standard cost price of my item card. But this is for a specific vendor so how is it working for other vendors? In fact I really dont know if it;s reasonnable to use the standard cost as a costing method in that type of case.

So any other ideas?

i thought of this senario, a bit complicated, donnow it it can help…

create (dummy) “ressources” with the name of your different charges, “freight”, “custom duties”… and set unit costs on the ressources.

create (dummy) items, and fill as unit cost, the “direct unit cost” of each item.

go to item card==>assembly list==>BOM, select as components (dummy) items, and fill the freight and other as ressources, you can sepcify the unit cost of each one by modifying the qty per ressource.

then you can calculate the standard cost according to the assembly list BOM!!!

it works when making a test for one item :D…

[:^)] [:'(]

Why don’t you like it? Standard Cost is the correct way for a true manufacturing operation to work. Where possible I would always recommend Standard Cost for manufacturing.

I was thinking this same thing as I was reading Taty’s post. Since the Assembly BOM does not interfere with the Production BOM, its an ideal solution. [Y]

Yes I have to admit that is a good solution.

You can always calculate correct standard costing using “calc standard costing” in item.

An excellent solution, but who wants to put money on the customer not wanting to put that much effort in to obtain a standard cost?

i’m flattered [:\$]

" [:’(]

Why don’t you like it? Standard Cost is the correct way for a true manufacturing operation to work. Where possible I would always recommend Standard Cost for manufacturing. "

Hi David,

It’s not a manufactuiring company, it is a distribution company. They distributes several types of socks to different big customers buy buying oversears. They used to manufacture but now they do not. That’s why i didnt want the standard cost but It’s a customer choice so …[:)]