Updating standard cost updating interior doors

The following guidelines focus on this typical scenario.The following guidelines assume use of a two-version approach to standard cost updates.These costs are frozen until a decision is made to change them.The actual cost to produce a product may differ from the estimated standard costs.For example, overhead subcontractor cost can represent freight and handling costs that are incurred by the company with a subcontracted order.Because subcontracting is an outsourced capacity, you set up the cost of both direct and indirect subcontracting services on the work center card that represents the subcontracting operation.

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Manufacturing environments involve maintaining standard costs for purchased items and manufactured items, which includes the scenario for updating standard costs throughout the frozen period.For management control, the actual cost is compared to the standard cost for a specific item and differences, or , are identified and analyzed.Standard costs can be maintained for items that are replenished through purchase, assembly, and production.In this approach, one costing version contains the first defined standard costs for the frozen period, and the second costing version contains the incremental updates that pertain to the new manufactured items.The incremental updates are entered as cost records in the second costing version and, ultimately, enabled.

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