Production standard cost in SAP Business One: how it works and where it stops

Set up and run standard costing for production

1. 1Set the valuation method on each item (Item Master > Inventory Data tab): Standard for finished and semi-finished items you want to control.
2. 2Enter the standard price for each such item. Decide how you calculate it: from BOM component cost plus labor and overhead outside the system, or with a DI-based script.
3. 3Configure G/L account determination: inventory, production variance and related accounts (Administration > Setup > Financials > G/L Account Determination).
4. 4Create and release production orders as usual. Issue components and post the receipt from production.
5. 5Review the order cost: planned versus actual component cost and quantity.
6. 6Close the order. The system posts the variance between actual cost and the standard value of the receipt to the variance account.
7. 7Review variances by period and update standard prices through a controlled periodic process, with finance approval.

Standard cost rollup and overhead

Common pitfalls

• !Mixing valuation methods between components and finished goods without understanding the effect on variances.
• !Changing standard price mid-period with open production orders.
• !Not mapping the variance account in account determination.
• !Leaving orders open so variances never post.
• !Assuming the add-on's cost model matches your finance team's method.