Under standard costing, predetermined costs are used for valuing inventory and for charging material, resource, overhead, period close, and job close and schedule complete transactions. Differences between standard costs and actual costs are recorded as variances.

• Use standard costing for performance measurement and cost control. Manufacturing industries typically use standard costing.
• If you use Inventory without WIP, you can define your item costs once for each item (in the cost master organization) and share those costs with other organizations. If you share standard costs across multiple organizations, all reports, inquiries, and processes use those costs. You are not required to enter duplicate costs. The cost master organization can be a manufacturing organization that uses WIP or Bills of Material. No organization sharing costs with the cost master organization can use Bills of Material.
• Inventory and WIP update inventory value and balances with each transaction.
• Value is maintained by cost elements (Ex. material, material overhead, resource, outside processing, and overhead).
• Examples of Inventory transactions using standard costs: Purchase Order Receipt to Receiving Inspection, Sales Order Shipments, Miscellaneous Transactions, Inter-Organization Transfers.  Examples of WIP transactions using standard costs: Component Issue and Return Transactions, Move Transactions, Outside Processing Charges & Overhead Charges