The company that I work for attempted to switch from average cost to standard cost for finished goods earlier this year. They ending up determining that they were not ready to switch, but now we have a “mixed bag” in our setup of parts. Some parts are set at standard and some are set at average. We have been told by Epicor that when standard costing is used, average costs no longer calculate.
The company produces a lot of custom parts and lot sizes jump around a lot, so standard costing does not really seem like an ideal fit for the company. I am worried that if we continue to try to switch to standard costing for finished goods, we will lose our average costs. It seems like these average costs would be good to look at when standard costs are analyzed each year.
So, for those of you that use standard cost, how do you do your annual analysis to determine if standard costs are in line with where they should be at?