SyteLine Costing Methods Comparison Guide
Choosing the right costing method in SyteLine has profound implications for financial reporting, inventory valuation, product profitability analysis, and operational decision-making. SyteLine supports standard costing, actual costing, average costing, and FIFO costing, each with distinct advantages, limitations, and operational requirements. Changing costing methods after go-live is one of the most complex ERP changes a manufacturer can undertake, so getting the initial decision right matters enormously.
Costing Methods Explained
Standard costing values inventory at predetermined costs, capturing variances for analysis. Actual costing values inventory at the real cost of each transaction. Average costing uses a weighted average across receipts. FIFO values consumption based on the oldest inventory first. Each method produces different inventory valuations, cost of goods sold, and variance reporting that affect financial statements and management reporting differently.
- Standard costing excels at variance analysis but requires annual cost rollup maintenance
- Actual costing provides precise product profitability but complicates mid-period reporting
- Average costing simplifies operations but obscures cost trends and supplier performance
- FIFO costing matches physical flow in most warehouses and satisfies GAAP and IFRS requirements
Selection Criteria for Manufacturers
The right costing method depends on manufacturing type, financial reporting requirements, and operational complexity. Make-to-stock repetitive manufacturers typically benefit from standard costing for its variance analysis capabilities. Job shops and engineer-to-order manufacturers often need actual costing for accurate job profitability. Distribution-heavy operations may prefer average costing for simplicity. Regulatory requirements in some jurisdictions may mandate specific methods.
- Evaluate your financial reporting requirements first—GAAP, IFRS, and tax regulations may constrain options
- Consider the volume and variety of transactions—high volume favors standard, high variety favors actual
- Assess your team's capacity for cost maintenance—standard costing requires periodic rollup and review
- Model the impact on key reports: inventory valuation, COGS, product margins, and variance analysis
Configuration and Transition Considerations
Configuring costing in SyteLine involves setting the costing method at the item level or globally, configuring cost elements (material, labor, overhead, outside processing), and setting up the variance accounts that capture differences between expected and actual costs. Transitioning between costing methods requires careful planning: inventory revaluation, GL account restructuring, and retraining of finance and operations teams.
- Configure cost elements to match your chart of accounts structure for clean financial reporting
- Set up variance accounts for each cost element to enable detailed variance analysis and reporting
- Run parallel costing for at least one full period before committing to a costing method change
- Train finance and operations teams on interpreting reports under the new costing method before go-live
Need help choosing or changing your SyteLine costing method? Our financial consultants guide the decision.
Related Resources
SyteLine Financial Close Process Automation
Automate SyteLine financial close processes. Month-end procedures, reconciliation, posting automation, and close cycle reduction for CloudSuite Industrial.
Infor SyteLineSyteLine BOM Management & Optimization with AI
Optimize SyteLine Bill of Materials with AI. Automated BOM validation, cost rollups, and engineering change management for Infor CloudSuite Industrial.
Infor SyteLineSyteLine MRP Tuning & Optimization
Tune SyteLine MRP parameters with AI for optimal inventory levels. Reduce excess stock 25-40% while improving fill rates in Infor CloudSuite Industrial.