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Community, 

Would like to borrow your mind. We have been suffering from below discrepancy of product cost, and we are looking for best practice.

Below is out situation:

1. Company uses Standard Cost.
2. Engineering release product new revision pretty frequently, i.e. multiple times within a month, but Standard cost review is far longer than engineering release time span.
Dilemma:
when doing standard cost review, products sitting in inventory sometimes have huge inventory cost discrepancy between inventory product cost and current standard cost. for example, on Apr.1, 2025, engineering release a new engineering revision 10 and transferred to the inventory revision 10, with a standard cost $100 updated in system on Apr.1, 2025.  The product currently in stock might manufactured under product revision 6, which inventory stand cost might be only $50.

It is also an opportunity, if the revision 6 product shop order received after Apr.1, 2025, system will capture $100 as the inventory value, which is also wrong.

What is the best practice for our situation? Thank you.

Hello,
Your question is around accounting policy of the company. 
In principle, standard costs are to be used in relatively stable situation, where purchase prices and product design is not changing frequently.. 

In IFS you have various other possibilities:

  • pricing products and lot/batch level instead of part level (could give you possibility to react to product design changes)
  • weighted average pricing
  • actual purchase/manufacturing prices (eliminating variances, but generating multiple revaluation postings - good for entities with lower number of operations). 

Perhaps your company should review its policy then

​@Adam Bereda appreciated your input.

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