End of Period Costing

When an item has predictable requirements for materials, labor and machine hours, you can establish typical or earned costs for manufacturing. The system bases costing variances on the difference between expected or earned costs and actual posted costs. Use the End of Period Costing activity to reconcile work center costs in earned hours and materials, comparing them to actual hours and materials posted against them.

You choose the time period on which to base the comparison, such as daily, weekly or monthly. You accumulate material, labor and machine hours for work centers when you perform the following activities:

Post Just-In-Time production
Complete quantities for a production schedule
Post work center transactions for labor, machine or materials

Note: End of Period Costing applies only to production schedules and JIT (Just in Time) production. To use End of Period Costing, you must use Standard Costing for the end items that are being manufactured as a result of production schedules or JIT production.