This topic Prerequisites For Standard Costs In D365 Operations describes the basic steps for using standard costs in Microsoft Dynamics. Subsequent steps depend on the company’s operations. For example, the steps differ for a non-manufacturing environment, a manufacturing environment that doesn’t use routings and the manufacturing environment that uses routings. To set up standard costs, follow these steps.
1. Create the item model group for standard costs.
Use the Item model groups page to create a new group for the standard costs, and assign an inventory model of Standard cost.
The identifier for an item model group should be meaningful, such as Std Cost.
Choose the checkboxes to indicate that the group should allow financial negative inventory and that it should post physical inventory and financial inventory. This standard cost group will be assigned to an item.
2. Define the ledger accounts that are related to standard cost variances.
Use the Chart of accounts page to define the ledger accounts that are related to standard cost variances. These ledger accounts must be defined before they can be assigned on a Posting page. The ledger accounts can reflect item groups and the cost groups.
3. Assign the ledger accounts to item postings that are related to standard cost variances.
Use Posting page to assign the ledger accounts that are related to standard cost variances. You can mention a variance’s ledger account by item (or item group) and by cost group (or cost group type), or you can specify that the ledger account applies to all items and all cost groups. These options correspond to the cost relations for tables, groups, and all.
Before you define the item posting rules, use the Transaction combinations page to enable the cost relations (for tables, groups, and all).
4. Define the inventory parameters that are related to standard costs.
Use the Bills of materials tab on the Inventory parameters page to define two cost control parameters
that are related to standard costs.
In the Cost breakdown field, choose None or Sub-ledger. If you select Sub-ledger, the cost
breakdown is an active cost breakdown. The active cost breakdown is critical for calculating, retaining, and viewing the cost group segmentation across a multilevel product structure for standard cost items.
When the cost breakdown is active, you can report and analyze the inventory, work in process (WIP), and cost of goods sold (COGS) per cost group in the single-level, multilevel, or total format. When the cost breakdown is active, if you activate a manufactured item’s cost, the cost group segmentation will be
stored in the item’s cost record.
If you choose None, cost group segmentation won’t be maintained for standard cost items. In other
words, the manufactured item’s standard cost will be calculated and maintained as a single amount,
without cost group segmentation. The cost contributions of manufactured components will be
aggregated into a single amount.
In the Variances to the standard field, select Summarized or Per cost group. If you select Per cost group,
you can identify the purchase price variances and production variances by cost group. You can also identify the four types of production variances: the lot size, quantity, price, and substitution variances.
If you choose Summarized, you can’t identify variances by cost group, and you can’t identify the four types of production variances. You can just view a summarized production variance.
The policy about variance to standard works independently of the cost breakdown policy. In other words, you can choose a cost breakdown policy of None and select variances per cost group, so that production variances by cost group will still be captured.
5. Create costing versions for standard costs.
Use the Costing version setup page to create one or more costing versions for the standard costs. Each costing version must be designated by the costing type of Standard cost and must allow content to include cost data.
6. Prepare the existing customer to use standard costs.
Customers who want to change their existing items to the standard cost inventory model must use the Standard cost conversions page.