Standard Costing

Standard costing is the simplest inventory valuation method. When Standard Costing is selected, the value of each item is set in the Product Cost text box on the Product window in OfficeMate. This cost value may be changed manually or updated automatically whenever product is received. The major disadvantage of standard costing is that when the cost of an item is changed and there is quantity on hand, the total inventory value as reported on the Inventory Valuation report is also changed. However, because no actual transaction is taking place, the change in cost is not reflected in the accounting system. Therefore, the value of inventory in the accounting system can not be accurately verified against the production system.