In ERP, cost is usually held in two layers: the standard cost calculated from the bill of materials and the routing, and the actual cost coming from production. The difference between them shows efficiency and price variances.
How it affects your decision
How cost will be calculated is not a software setting but a management decision. If this decision is not made at the start of the project, the ERP goes live but the reports remain unreliable. The costing method and allocation keys should be set out in writing in the scope.
Where you will meet it
Related terms
What does this term mean in your project?
Talk to a consultant; let’s look at it together through your own processes.