The following steps are required when setting up standard costing. Additional steps follow in the next section for those also using WIP or BOM or both.

• Define organization parameters:

• Define cost types.
• Define activities and activity costs.
• Define material overhead defaults.
• Define item and item costs, and establish item cost controls.
• Launch transaction managers.

To set up standard costing with BOM and WIP:
1. Run a summary audit to validate your structures. After you have defined your bill and routing structures, items and unit costs, you should run the summary audits to ensure information integrity. These audits check for bill of material structures with no headers, valued items with no costs, and so
on.
2. Perform cost rollup as appropriate to set initial standard costs.
With the initial cost rollup/update, you complete the setup of the manufacturing cost structure and begin normal processing, including purchase order receipts, material issues, job/schedule creation, shop floor moves, and so on. Later, you analyze, report, and distribute costs through the period close process.
3. Perform a cost update after rolling up assemblies. This revalues inventory and implements new costs.

Phantom Costing
You can cost phantom assemblies in the following:

• Work in Process
• Discrete and repetitive manufacturing environments
• Standard and average organizations

You can set up phantom assemblies just like any other assembly and include resource and overhead costs.

Two BOM parameters control the behavior of phantoms:
Inherit Phantom Operation Sequence: Controls inheritance of the parent's operation sequence.
Note: Inherit Phantom Operation Sequence, previously a WIP parameter, is now a BOM parameter.
Use Phantom Routings: Determines if resources and overheads on phantom routings are recognized for costing and capacity planning purposes.