Before standard cost is updated in Accounting Seed users should run a report on the quantity available by product on the inventory balance and compare this to the quantity available in the general ledger. An inventory adjustment should be made to synchronize any differences between the quantity available for the product in the general ledger and the inventory balance before an update of standard cost is done.
Updating Standard Cost
The unit cost for a product should be updated to better match market values periodically, and should always be done in the base currency of your organization. Accounting Seed recommends reviewing your product standard cost at least once every 3-12 months. To update standard cost the quantity in the inventory balance should match the quantity available in the general ledger. If the two balances do not match perform an inventory adjustment to synchronize the balances. To update the standard cost perform the following steps:
- Run a report on the inventory balance taking the quantity available and multiply it by product unit cost field. The quantity available times the product unit cost will give you the total inventory value.
- Quantity on Hand
- Total inventory value
- Ledger Cost per unit
- The ledger cost per unit needs to be compared to the new standard cost per unit. The difference should be booked to the General Ledger at the product level, via a journal entry.
- After the adjustment to the General Ledger is made the standard unit cost per product should be updated on the product master.