Managing standard cost in D365 F&SCM

Managing standard cost in D365 F&SCM is essential for accurately tracking the cost of goods sold and maintaining profitability. Here's a guide on how to effectively manage standard cost in D365 F&SCM:

1. Set Up Costing Versions: Begin by setting up costing versions in D365 F&O. Costing versions allow you to define different costing methods and apply them to specific scenarios.
2. Define Costing Methods: Choose the appropriate costing method for your organization's needs. Common costing methods include standard cost, weighted average cost, FIFO, and LIFO. Standard cost is often used for stable manufacturing environments where costs are relatively consistent over time.
3. Set Up Standard Costs: Once you've chosen the standard cost method, establish standard costs for your items. Standard costs represent the expected cost of producing or purchasing an item and include factors such as material, labor, and overhead costs.
4. Maintain Costing Records: Regularly review and update costing records to ensure they accurately reflect current costs. You can adjust standard costs based on changes in material prices, labor rates, or overhead expenses.
5. Monitor Cost Variances: Monitor cost variances to identify discrepancies between standard costs and actual costs. D365 F&O provides tools for analyzing cost variances and investigating the root causes of discrepancies.
6. Perform Cost Rollups: Periodically perform cost rollups to update standard costs based on the latest cost data. Cost rollups recalculate standard costs for all items based on current cost components.
7. Use Costing Worksheets: D365 F&O offers costing worksheets that allow you to simulate the impact of cost changes before committing them. Use costing worksheets to perform what-if analyses and assess the effects of potential cost updates.
8. Integrate with Other Modules: Ensure integration between standard cost management and other modules in D365 F&O, such as procurement, production, and inventory management. This integration enables seamless cost tracking and visibility across the supply chain.
9. Implement Cost Controls: Establish controls to prevent unauthorized changes to standard costs and ensure data integrity. Limit access to standard cost maintenance to authorized personnel and implement approval workflows for cost updates.
10. Regularly Review Costing Policies: Review costing policies and procedures periodically to ensure they align with business objectives and industry best practices. Make adjustments as needed to improve accuracy and efficiency.

By following these best practices, organizations can effectively manage standard cost in D365 F&SCM, enabling better cost control, decision-making, and financial performance.