Costing Price Determination
Costing price determination plays a critical role in manufacturing and production processes, influencing how businesses calculate, track, and manage costs associated with their products. Accurate costing ensures businesses maintain profitability, meet market demands, and stay competitive. This table provides a detailed comparison of different costing methods—Standard, Moving Average, and FIFO & Serial Number/Batch—across various scenarios like final goods, co-products, and scrap, under distinct costing approaches such as dynamic costing, item costing, and more. It highlights the key features, conditions, and changes applicable during the creation of pick receipts, goods receipts, and back-flush processes.
| Costing | ||||||
|---|---|---|---|---|---|---|
| Standard | Moving Average | FIFO & Serial Number/Batch | ||||
| Can Change on Pick Receipt | Description | Can Change on Pick Receipt | Description | Can Change on Pick Receipt | Description | |
| Final Good | ✔️ | Value is copied from CC000* on MOR creation. | ✔️ | Value is copied from CC000 on MOR creation. | ✔️ | Value is copied from CC000 on MOR creation. |
| Co-Product | ✔️ | Value is copied from CC000 on MOR creation. | ✔️ | Value is copied from CC000 on MOR creation. | ✔️ | Value is copied from CC000 on MOR creation. |
| Scrap | ✔️ | Value is copied from CC000 on MOR creation. | ✔️ | Value is copied from CC000 on MOR creation. | ✔️ | Value is copied from CC000 on MOR creation. |
| Co-Product (back-flush) | ✔️ (On MOR) | Value is copied from CC000 on MOR creation. | ✔️ (On MOR) | Value is copied from CC000 on MOR creation. | ✔️ (On MOR) | Value is copied from CC000 on MOR creation. |
| Scrap (back-flush) | ✔️(On MOR) | Value is copied from CC000 on MOR creation. | :heavy_check_mark (On MOR) | Value is copied from CC000 on MOR creation. | ✔️(On MOR) | Value is copied from CC000 on MOR creation. |
| Dynamic Costing | ||||||
| Standard | Moving Average | FIFO & Serial Number/Batch | ||||
| Can Change on Pick Receipt | Description | Can Change on Pick Receipt | Description | Can Change on Pick Receipt | Description | |
| Final Good | ❌ | Value is computed from all receipts and issues (standard price variances are posted). We also update price on Pick Receipt after receipt. | ❌ | Value is computed with overhead and all receipts and issues (update price on Pick after receipt). | ❌ | Value is computed with overhead and all receipts and issues (update price on Pick after receipt). |
| Co-Product | ❌ | Value is copied from CC000 on Pick Receipt creation and is updated when Goods Receipt is created directly from CC000. When quantity on Pick Receipt is changed we update price field (for informational purpose). We also update price on Pick Receipt after Goods Receipt is created. | ❌ | Value is copied from CC000 on Pick Receipt creation and is updated when Goods Receipt is created directly from CC000. When quantity on Pick Receipt is changed we update price field (for informational purpose). We also update price on Pick Receipt after Goods Receipt is created. | ❌ | Value is copied from CC000 on Pick Receipt creation and is updated when Goods Receipt is created directly from CC000. When quantity on Pick Receipt is changed we update price field (for informational purpose). We also update price on Pick Receipt after Goods Receipt is created. |
| Scrap | ❌ | Value is copied from CC000 on Pick Receipt creation and is updated when Goods Receipt is created directly from CC000. When quantity on Pick Receipt is changed we update price field (for informational purpose). We also update price on Pick Receipt after Goods Receipt is created. | ❌ | Value is copied from CC000 on Pick Receipt creation and is updated when Goods Receipt is created directly from CC000. When quantity on Pick Receipt is changed we update price field (for informational purpose). We also update price on Pick Receipt after Goods Receipt is created. | ❌ | Value is copied from CC000 on Pick Receipt creation and is updated when Goods Receipt is created directly from CC000. When quantity on Pick Receipt is changed we update price field (for informational purpose). We also update price on Pick Receipt after Goods Receipt is created. |
| Co-Product (back-flush) | ❌ | Value is copied from CC000 on Goods Receipt. | ❌ | Value is copied from CC000 on Goods Receipt. | ❌ | Value is copied from CC000 on Goods Receipt. |
| Scrap (back-flush) | ❌ | Value is copied from CC000 on Goods Receipt. | ❌ | Value is copied from CC000 on Goods Receipt. | ❌ | Value is copied from CC000 on Goods Receipt. |
| Item Costing | ||||||
| Standard | Moving Average | FIFO & Serial Number/Batch | ||||
| Can Change on Pick Receipt | Description | Can Change on Pick Receipt | Description | Can Change on Pick Receipt | Description | |
| Final Good | ❌ | Value is copied from CC000 on Pick Receipt creation and is updated when Goods Receipt is created directly from CC000. When quantity on Pick Receipt is changed we update price field (for informational purpose). We also update price on Pick Receipt after Goods Receipt is created. | ❌ | Value is copied from CC000 on Pick Receipt creation and is updated when Goods Receipt is created directly from CC000. When quantity on Pick Receipt is changed we update price field (for informational purpose). We also update price on Pick Receipt after Goods Receipt is created. | ❌ | Value is copied from CC000 on Pick Receipt creation and is updated when Goods Receipt is created directly from CC000. When quantity on Pick Receipt is changed we update price field (for informational purpose). We also update price on Pick Receipt after Goods Receipt is created. |
| Co-Product | ❌ | Value is copied from CC000 on Pick Receipt creation and is updated when Goods Receipt is created directly from CC000. When quantity on Pick Receipt is changed we update price field (for informational purpose). We also update price on Pick Receipt after Goods Receipt is created. | ❌ | Value is copied from CC000 on Pick Receipt creation and is updated when Goods Receipt is created directly from CC000. When quantity on Pick Receipt is changed we update price field (for informational purpose). We also update price on Pick Receipt after Goods Receipt is created. | ❌ | Value is copied from CC000 on Pick Receipt creation and is updated when Goods Receipt is created directly from CC000. When quantity on Pick Receipt is changed we update price field (for informational purpose). We also update price on Pick Receipt after Goods Receipt is created. |
| Scrap | ❌ | Value is copied from CC000 on Pick Receipt creation and is updated when Goods Receipt is created directly from CC000. When quantity on Pick Receipt is changed we update price field (for informational purpose). We also update price on Pick Receipt after Goods Receipt is created. | ❌ | Value is copied from CC000 on Pick Receipt creation and is updated when Goods Receipt is created directly from CC000. When quantity on Pick Receipt is changed we update price field (for informational purpose). We also update price on Pick Receipt after Goods Receipt is created. | ❌ | Value is copied from CC000 on Pick Receipt creation and is updated when Goods Receipt is created directly from CC000. When quantity on Pick Receipt is changed we update price field (for informational purpose). We also update price on Pick Receipt after Goods Receipt is created. |
| Co-Product (back-flush) | ❌ | Value is copied from CC000 on Goods Receipt. | ❌ | Value is copied from CC000 on Goods Receipt. | ❌ | Value is copied from CC000 on Goods Receipt. |
| Scrap (back-flush) | ❌ | Value is copied from CC000 on Goods Receipt. | ❌ | Value is copied from CC000 on Goods Receipt. | ❌ | Value is copied from CC000 on Goods Receipt. |
Costing methods have a significant impact on operational efficiency and financial reporting. Understanding the nuances of each approach - whether it's the predictability of standard costing, the adaptability of moving average, or the specificity of FIFO - enables businesses to align their strategies with their operational goals. By analyzing and applying the right costing practices, organizations can optimize resource utilization, maintain transparency, and support informed decision-making for long-term success.