Standard and actual cost warehouses

Actual costing depends on the valuation method specified in Warehousing.

• If you are using LIFO, FIFO, MAUC, or Lot control, implementing actual costing is recommended. When actual costing is implemented, profit and loss are 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 the Standard cost inventory valuation method, items are booked at either profit or loss via standard cost results, as soon as they are received in inventory. At the end of the fiscal year, this may result in a profit or loss even if nothing was sold.

You can receive end items of a production order into inventory against estimated or actual costs. The results at the end of the fiscal year will vary depending on the inventory valuation method selected for the receiving warehouse:

• Actual Cost Production Order to a Standard Cost Warehouse

  If the warehouse uses the standard cost inventory valuation method, the differences between actual cost and the standard cost are booked as the result, and the end item is registered to the warehouse using the standard cost valuation. Note: If project pegging is selected for the end item, the valuation method must be LIFO, FIFO or MAUC.

• Estimated Cost Production Order to a Standard Cost Warehouse

  If the warehouse uses the standard cost inventory valuation method, there will be no difference in cost once the end items are received in inventory. Cost variances in the production order are processed into inventory, are added to the standard cost of the inventory, changing the value of the end item in inventory.

• Actual Cost Production Order to a Actual Cost Warehouse

  If both the production order and the warehouse calculations are performed against actual costs, no variances should be present. The end item is received into inventory against the cost of production.