Implementing Manufacturing and Materials Management: From Empty Plant to Costed Work Order · Module 15 · Cost Accounting Structures
Choosing a cost method
Lesson 149 of 188 · 3 min
Three methods. Standard cost — a predetermined cost per item, set periodically, where actual costs differ and the difference is a variance. Actual cost — the specific cost of the specific units, typically FIFO-based layers. Perpetual average — a running weighted average, recalculated on every receipt. Standard cost is for manufacturing control. Variance analysis is the entire point: you set a standard, you measure against it, and the variances tell you where the business is losing money. Excellent for repetitive manufacturing. What it costs you: somebody must set and maintain the standards, and roll them up annually or more often. If nobody owns that, standards go stale and every variance becomes noise — not wrong, noise, which is worse, because a report full of variances nobody trusts stops being read. Actual cost is for businesses where each batch genuinely costs a different amount and that matters — high-value, low-volume, project-driven,…
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In this module: Module 15 · Cost Accounting Structures
- 1What we are building
- 2The warning nobody readsFree preview
- 3The costing object model
- 4Choosing a cost method
- 5Cost organization design
- 6Running the costing design workshop
- 7Cost organizations and cost books
- 8Cost organization relationships
- 9Cost elements and components
- 10Cost component mappings
- 11Valuation structures and units
- 12Cost profiles
- 13Expense pools and accounting
- 14Quick setup for cost accounting
- 15What breaks
- 16Lab briefing: the Halden costing design
- 17Lab solution walkthrough