Introduction to standard and actual costing

After items are produced in Manufacturing, they are transferred to inventory.

• If you are using LIFO, FIFO, MAUC, or Lot control, actual costing is preferred. Profit or loss is determined only after the end item is sold.

  The actual amounts for materials, hours, and subcontracting are used to determine the price of the end item. The amounts reported during the receipt postings are used to calculate the value of the end item in inventory, according to the chosen valuation method.

• If you use FTP inventory valuation method, items received in inventory are instantly booked as either profit or loss via FTP result. At the end of the fiscal year this may result in a profit or loss even if nothing was sold.

In Manufacturing, actual costing is used for a production order if the following conditions are met:

• The End Item Receipt Posting check box in the Production Order Parameters (tisfc0100s000) session is selected.
• The valuation method defined for the production order's end item in the Item Data by Warehouse (whwmd2510m000) details session is LIFO, FIFO, MAUC, or lot control.