Making the case for why US-based companies should enhance their costing processes and add actual costing to their processes. This will drive more automation and ease of compliance with US GAAP and FASB ASC 330-10-30-12, which states, “Standard costs are acceptable if adjusted at reasonable intervals to reflect current conditions so that at the balance-sheet date standard costs reasonably approximate costs computed under one of the recognized bases.”

Many companies have historically found it easier to value their inventory at a periodically calculated standard cost and then evaluate the variances between the actual and standard cost. They can then determine if these costs should be capitalized into inventory and amortized. With SAP Material Ledger Actual Costing in S/4 HANA, these variances can be automatically rolled up and posted on the balance sheet, either into the perpetual inventory accounts or posted into accrual accounts.