We end consumers are always looking for any kind of cost saving opportunities. No matter what cashback, discount, buy one get one free and many more, we will always try to acquire them to save our money. How if i say that with NetSuite even companies can get some cost saving opportunities. Yes, you read it right. With the help of NetSuite Standard Costing, companies can save their money which in turn will be kind of profit to your company. So what is NetSuite Standard Costing? How to implement it? Lets see.
What is NetSuite Standard Costing?
NetSuite Standard Costing will help you identify and understand all the cost saving opportunities in the field of manufacturing and procurement. This process is carried out by letting the users to track all the cost variances by different categories.
What are the necessary features for NetSuite Standard Costing?
There are 3 necessary features. They are:
- Standard costing Enable/disable feature (for the inventories and items)
- Multi Location Inventory Enable/Disable.
- Your system’s option of “Use item cost as transfer price” must be disabled. (Accounting Preferences)
How to set up NetSuite Standard Costing?
- Define the category of cost for the inventory
- Allow the users to review all the different variance by their category i.e. labour and material etc.
- Then you need to create the new cost category. For that go to SETTINGS > ACCOUNTING > ACCOUNTING LIST. Here there will be different types of categories involved. Some important points to be noted are:
- The items in inventory can only have the one material cost category
- Service items will also be having only one service cost category
- The only exception is that assembly items are allowed to have one plus ) cost category.
- Define the Cost Version
- Will allow all the users to store the inventory items with costs in the different versions based on the assigned effective dates.
- To create the new cost versions. Simply navigate LIST > ACCOUNTING > ACCOUNTING LIST
- Item Record Setup
- PURCHASING / INVENTORY tab – choose Costing Method
- Choose the Cost Category
- Choose the variance accounts
- Production Price Variance Account
- Production Quantity Variance Account
- Purchase Price Variance Account
- Set Planned Standard Cost Record for Inventory Items based on Cost Version
- Go to LIST > ACCOUNTING > PLANNED STANDARD COSTS
- Run Cost Roll up program
- Calculate the assembly item’s rate or cost considering the costs of the components
- Then go to LIST > ACCOUNTING > COST ROLL UP
- Run revalue Standard Cost inventory
- LIST > ACCOUNTING > REVALUE STANDARD COST INVENTORY
- This will set a new standard cost based on standard of cost versions as per location
- Revalues / Reviews inventory which is based on the standard costs and changes
Well if there is any opportunity of a saving available then it is not less than a profit for the company. So far after studying the NetSuite Standard Costing it is for sure that implementing this will be beneficial for your company.
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