Cost Management needs to be understood as the activity that manages product movements at transactional level and their accounting consequences. Absolutely all movements (entries and exits) performed at transactional level will also have accounting consequences for all stockable products and their value is given by their cost. These costs include both the material/stockable values and the non-material ones (e.g. transport expenses, insurance, etc.). This facilitates the determination of both the total actual costs associated to each product and the profit made by selling them. Furthermore, it allows for the accurate tracking of costs of internally-used products.
Costs, if viewed from a business perspective, are relatively simple. You need to order a product, receive it in the corresponding warehouse, and get an invoice for this. There are no additional costs, such as transport expenses nor any special discounts. Afterwards, you sell the product. In real life, however, it is completely different: Sometimes you receive the invoice before the product or the product is sold before you receive the invoices associated to the transport costs. Occasionally, the product requires special handling and you need to include the corresponding costs. These, as well as other factors, affect the costs' accuracy. It is very important to remember that, in the end, the precision of cost keeping depends mostly on the time and effort you allocate with this specific purpose. There will be situations when the effort required to gather and allocate these costs (e.g. power consumption) will be much greater than the benefits you will receive from doing this.
The SocrateCloud "Costing" functionality covers a large array of real life situations and offers a high degree of flexibility which helps you deal with unexpected changes that can during the use of the system. Adjustments can be made in order to make the functionality meet any business requirements. The level of detail at which the costs are kept lies under the direct decision of the management. You can also use multiple cost methods is parallel: standard cost, actual cost, FIFO.
In order to respect the warehouse discharge methods (FIFO, LIFO) primary documents must be processed in a strictly chronological order!