The ‘standard costing’ method of accounting only works well if your raw materials costs do not fluctuate more than a small percentage over time. This is not always the case in todays economy.
I have one manufacturer that develops, manufactures, and supplies specific chemicals to the commercial trucking and aircraft industries. They are not afraid to work with exotic substances in order to create great products. The downside is that the cost of the raw material chemicals can fluctuate as much a s 30% month to month. These things are affected by more than just market conditions, but changing tariffs, labor disputes, changing world wide regulation of different chemical classes, plus regular old supply and demand. In one case when only two companies in the country dared to make a raw material and one of them had a factory fire the halted production for almost a year, the cost of a key ingredient to one product jumped from $145/kg to $398/kg over the course of one week.
If the production costs do not fluctuate with the production run based on the current cost of materials, then this customer would have to close down production. The reality is the industries they service are aware of the supply side issues and accept the price increases.
Standard Costing would not work very well here because everything would be an exception.
This is also one of the reasons I have limited my manufacturing clients to the 3 I already have and will not take on any further clients that need the manufacturing module. The biggest reason is of course scrap management, but that a whole different topic.