The Standard Costing feature in NetSuite enables manufacturers and wholesale distributors to identify and correct problems with inventory costing issues by giving insight into costing variances and their causes.
Using Standard Costing, you maintain standard costs across cost categories for an item. These standard costs identify the expenses you expect to incur for items over time. Keeping track of the expected cost lets you to compare that amount to the cost you incur for items. Then, you can analyze any variances between the standard (expected) cost and actual cost of items.
Standard Costing not only tells you that a variance occurs, but it also helps you understand why costs are different from what was expected. Variances might be caused by changes in how much you pay for the material or by changes in the quantity of material used.
Knowing the cause of the variance helps you identify opportunities to correct costing issues in your manufacturing and procurement processes and take action to improve on these areas in the future.
This process also runs an inventory revaluation. This process reviews your inventory and revalues it based on current standard cost changes.