diff --git a/erpnext/accounts/doctype/purchase_invoice/services/gl_composer.py b/erpnext/accounts/doctype/purchase_invoice/services/gl_composer.py
index 9dbd8f01b3b..f776994a29b 100644
--- a/erpnext/accounts/doctype/purchase_invoice/services/gl_composer.py
+++ b/erpnext/accounts/doctype/purchase_invoice/services/gl_composer.py
@@ -3,6 +3,7 @@
 
 import frappe
 from frappe import _
+from frappe.query_builder.functions import Sum
 from frappe.utils import cint, flt, get_link_to_form
 
 import erpnext
@@ -130,6 +131,7 @@ class PurchaseInvoiceGLComposer(BaseGLComposer):
 		from erpnext.accounts.doctype.purchase_invoice.purchase_invoice import (
 			get_purchase_document_details,
 		)
+		from erpnext.stock.utils import get_valuation_method
 
 		doc = self.doc
 		tax_service = TaxService(doc)
@@ -329,20 +331,33 @@ class PurchaseInvoiceGLComposer(BaseGLComposer):
 						self.make_provisional_gl_entry(gl_entries, item)
 
 					if not doc.is_internal_transfer():
-						gl_entries.append(
-							self.get_gl_dict(
-								{
-									"account": expense_account,
-									"against": doc.supplier,
-									"debit": base_amount,
-									"debit_in_transaction_currency": amount,
-									"cost_center": item.cost_center,
-									"project": item.project or doc.project,
-								},
-								account_currency,
-								item=item,
+						handled = False
+						if (
+							item.item_code
+							and item.item_code in stock_items
+							and item.get("purchase_receipt")
+							and not doc.is_return
+							and get_valuation_method(item.item_code, doc.company) == "Standard Cost"
+						):
+							handled = self.make_standard_cost_srbnb_split(
+								gl_entries, item, expense_account, account_currency, base_amount
+							)
+
+						if not handled:
+							gl_entries.append(
+								self.get_gl_dict(
+									{
+										"account": expense_account,
+										"against": doc.supplier,
+										"debit": base_amount,
+										"debit_in_transaction_currency": amount,
+										"cost_center": item.cost_center,
+										"project": item.project or doc.project,
+									},
+									account_currency,
+									item=item,
+								)
 							)
-						)
 
 						# check if the exchange rate has changed
 						if (
@@ -515,6 +530,107 @@ class PurchaseInvoiceGLComposer(BaseGLComposer):
 				},
 			)
 
+	def make_standard_cost_srbnb_split(
+		self, gl_entries, item, expense_account, account_currency, base_amount
+	):
+		"""For a Standard Cost item billed against a Purchase Receipt, clear SRBNB at the standard
+		value the receipt actually booked and post the (Net Amount - standard) difference to the
+		Purchase Price Variance account. Returns False (caller falls back) if the receipt value
+		can't be resolved."""
+		from erpnext.stock.doctype.item_standard_cost.item_standard_cost import (
+			get_purchase_price_variance_account,
+		)
+
+		doc = self.doc
+		precision = item.precision("base_net_amount")
+		standard_value = flt(self.get_pr_stock_value(item), precision)
+		if not standard_value:
+			return False
+
+		gl_entries.append(
+			self.get_gl_dict(
+				{
+					"account": expense_account,
+					"against": doc.supplier,
+					"debit": standard_value,
+					"debit_in_transaction_currency": flt(standard_value / doc.conversion_rate, precision),
+					"remarks": doc.get("remarks") or _("Accounting Entry for Stock"),
+					"cost_center": item.cost_center,
+					"project": item.project or doc.project,
+				},
+				account_currency,
+				item=item,
+			)
+		)
+
+		variance = flt(base_amount - standard_value, precision)
+		if variance:
+			gl_entries.append(
+				self.get_gl_dict(
+					{
+						"account": get_purchase_price_variance_account(item.item_code, doc.company),
+						"against": doc.supplier,
+						"debit": variance,
+						"debit_in_transaction_currency": flt(variance / doc.conversion_rate, precision),
+						"remarks": doc.get("remarks") or _("Purchase Price Variance"),
+						"cost_center": item.cost_center,
+						"project": item.project or doc.project,
+					},
+					item=item,
+				)
+			)
+
+		return True
+
+	def get_pr_stock_value(self, item):
+		"""Stock value (at standard) the linked Purchase Receipt booked for the quantity this invoice
+		row is billing.
+
+		Accepted and rejected stock for the same receipt row share `voucher_detail_no`, so the
+		warehouse filter is required: without it the accepted warehouse's SRBNB would be cleared at
+		accepted + rejected value and post the wrong Purchase Price Variance amount. The accepted
+		warehouse is read from the receipt row itself (not the invoice row, which may be unset on a
+		non-stock invoice).
+
+		The receipt's full accepted value is pro-rated to the invoiced quantity, so a partial bill
+		clears SRBNB (and posts PPV) for only the units it covers, not the whole receipt row."""
+		pr_detail = frappe.db.get_value(
+			"Purchase Receipt Item", item.pr_detail, ["warehouse", "stock_qty"], as_dict=True
+		)
+		if not pr_detail or not pr_detail.warehouse:
+			return 0.0
+
+		sle = frappe.qb.DocType("Stock Ledger Entry")
+		result = (
+			frappe.qb.from_(sle)
+			.select(Sum(sle.stock_value_difference))
+			.where(
+				(sle.voucher_type == "Purchase Receipt")
+				& (sle.voucher_no == item.purchase_receipt)
+				& (sle.voucher_detail_no == item.pr_detail)
+				& (sle.warehouse == pr_detail.warehouse)
+				& (sle.is_cancelled == 0)
+			)
+		).run()
+		accepted_value = flt(result[0][0]) if result and result[0][0] else 0.0
+		if not accepted_value or not flt(pr_detail.stock_qty):
+			return accepted_value
+
+		# Pro-rate to the quantity being billed by this invoice row (handles partial billing).
+		return accepted_value * flt(item.stock_qty) / flt(pr_detail.stock_qty)
+
+	def get_stock_variance_account(self, item):
+		"""For Standard Cost items the purchase-price-vs-standard difference is a Purchase Price
+		Variance; for all other items it keeps the existing behaviour (default expense account)."""
+		from erpnext.stock.doctype.item_standard_cost.item_standard_cost import (
+			get_purchase_price_variance_account,
+		)
+		from erpnext.stock.utils import get_valuation_method
+
+		if item.item_code and get_valuation_method(item.item_code, self.doc.company) == "Standard Cost":
+			return get_purchase_price_variance_account(item.item_code, self.doc.company)
+		return self.doc.get_company_default("default_expense_account")
+
 	def make_stock_adjustment_entry(self, gl_entries, item, voucher_wise_stock_value, account_currency):
 		doc = self.doc
 		net_amt_precision = item.precision("base_net_amount")
@@ -536,7 +652,7 @@ class PurchaseInvoiceGLComposer(BaseGLComposer):
 			)
 
 			if flt(stock_amount, net_amt_precision) != flt(warehouse_debit_amount, net_amt_precision):
-				cost_of_goods_sold_account = doc.get_company_default("default_expense_account")
+				cost_of_goods_sold_account = self.get_stock_variance_account(item)
 				stock_adjustment_amt = stock_amount - warehouse_debit_amount
 
 				gl_entries.append(
@@ -561,7 +677,7 @@ class PurchaseInvoiceGLComposer(BaseGLComposer):
 			and warehouse_debit_amount
 			!= flt(voucher_wise_stock_value.get((item.name, item.warehouse)), net_amt_precision)
 		):
-			cost_of_goods_sold_account = doc.get_company_default("default_expense_account")
+			cost_of_goods_sold_account = self.get_stock_variance_account(item)
 			stock_amount = flt(voucher_wise_stock_value.get((item.name, item.warehouse)), net_amt_precision)
 			stock_adjustment_amt = warehouse_debit_amount - stock_amount
 
diff --git a/erpnext/controllers/stock_controller.py b/erpnext/controllers/stock_controller.py
index 5354c8c6f4e..0fe4ada4e5c 100644
--- a/erpnext/controllers/stock_controller.py
+++ b/erpnext/controllers/stock_controller.py
@@ -820,6 +820,8 @@ def create_item_wise_repost_entries(
 ):
 	"""Using a voucher create repost item valuation records for all item-warehouse pairs."""
 
+	from erpnext.stock.utils import get_valuation_method
+
 	stock_ledger_entries = get_items_to_be_repost(voucher_type, voucher_no)
 
 	distinct_item_warehouses = set()
@@ -831,6 +833,11 @@ def create_item_wise_repost_entries(
 			continue
 		distinct_item_warehouses.add(item_wh)
 
+		# Standard Cost items don't need a full repost: a backdated entry only shifts future balances
+		# (qty and value at the standard rate), which is done in place by update_qty_in_future_sle.
+		if get_valuation_method(sle.item_code) == "Standard Cost":
+			continue
+
 		repost_entry = frappe.new_doc("Repost Item Valuation")
 		repost_entry.based_on = "Item and Warehouse"
 
diff --git a/erpnext/setup/doctype/company/company.json b/erpnext/setup/doctype/company/company.json
index 49f61238839..1244c72751d 100644
--- a/erpnext/setup/doctype/company/company.json
+++ b/erpnext/setup/doctype/company/company.json
@@ -129,6 +129,7 @@
   "valuation_method",
   "column_break_32",
   "stock_adjustment_account",
+  "default_purchase_price_variance_account",
   "stock_received_but_not_billed",
   "stock_delivered_but_not_billed",
   "disable_sdbnb_in_sr",
@@ -491,6 +492,15 @@
    "no_copy": 1,
    "options": "Account"
   },
+  {
+   "description": "Used for items valued at Standard Cost: the difference between the purchase price and the standard rate is booked here.",
+   "fieldname": "default_purchase_price_variance_account",
+   "fieldtype": "Link",
+   "ignore_user_permissions": 1,
+   "label": "Default Purchase Price Variance Account",
+   "no_copy": 1,
+   "options": "Account"
+  },
   {
    "fieldname": "column_break_32",
    "fieldtype": "Column Break"
@@ -1004,7 +1014,7 @@
  "image_field": "company_logo",
  "is_tree": 1,
  "links": [],
- "modified": "2026-05-14 16:50:34.132345",
+ "modified": "2026-06-26 10:05:00.000000",
  "modified_by": "Administrator",
  "module": "Setup",
  "name": "Company",
diff --git a/erpnext/stock/doctype/bin/bin.py b/erpnext/stock/doctype/bin/bin.py
index b7393b49cba..2b3c40b22ca 100644
--- a/erpnext/stock/doctype/bin/bin.py
+++ b/erpnext/stock/doctype/bin/bin.py
@@ -277,19 +277,27 @@ def update_qty(bin_name, args):
 		- flt(bin_details.reserved_qty_for_production_plan)
 	)
 
-	frappe.db.set_value(
-		"Bin",
-		bin_name,
-		{
-			"actual_qty": actual_qty,
-			"ordered_qty": ordered_qty,
-			"reserved_qty": reserved_qty,
-			"indented_qty": indented_qty,
-			"planned_qty": planned_qty,
-			"projected_qty": projected_qty,
-		},
-		update_modified=True,
-	)
+	bin_values = {
+		"actual_qty": actual_qty,
+		"ordered_qty": ordered_qty,
+		"reserved_qty": reserved_qty,
+		"indented_qty": indented_qty,
+		"planned_qty": planned_qty,
+		"projected_qty": projected_qty,
+	}
+
+	# Standard Cost items are not reposted on backdated entries, so the Bin's stock value is not
+	# refreshed by a repost. Keep it in step with the balance at the standard rate.
+	from erpnext.stock.utils import get_valuation_method
+
+	if get_valuation_method(args.get("item_code")) == "Standard Cost":
+		from erpnext.stock.doctype.item_standard_cost.item_standard_cost import get_item_standard_rate
+
+		bin_values["stock_value"] = flt(actual_qty) * flt(
+			get_item_standard_rate(args.get("item_code"), args.get("company"))
+		)
+
+	frappe.db.set_value("Bin", bin_name, bin_values, update_modified=True)
 
 
 def get_actual_qty(item_code, warehouse):
diff --git a/erpnext/stock/doctype/item/item.json b/erpnext/stock/doctype/item/item.json
index 8a458e8ea04..0f5840c3a0a 100644
--- a/erpnext/stock/doctype/item/item.json
+++ b/erpnext/stock/doctype/item/item.json
@@ -384,7 +384,7 @@
    "fieldname": "valuation_method",
    "fieldtype": "Select",
    "label": "Valuation Method",
-   "options": "\nFIFO\nMoving Average\nLIFO"
+   "options": "\nFIFO\nMoving Average\nLIFO\nStandard Cost"
   },
   {
    "depends_on": "is_stock_item",
@@ -1090,7 +1090,7 @@
  "image_field": "image",
  "links": [],
  "make_attachments_public": 1,
- "modified": "2026-05-27 10:18:46.862670",
+ "modified": "2026-06-26 10:05:00.000000",
  "modified_by": "Administrator",
  "module": "Stock",
  "name": "Item",
diff --git a/erpnext/stock/doctype/item/item.py b/erpnext/stock/doctype/item/item.py
index b3af09513cc..a26f58430bf 100644
--- a/erpnext/stock/doctype/item/item.py
+++ b/erpnext/stock/doctype/item/item.py
@@ -143,7 +143,7 @@ class Item(Document):
 		taxes: DF.Table[ItemTax]
 		total_projected_qty: DF.Float
 		uoms: DF.Table[UOMConversionDetail]
-		valuation_method: DF.Literal["", "FIFO", "Moving Average", "LIFO"]
+		valuation_method: DF.Literal["", "FIFO", "Moving Average", "LIFO", "Standard Cost"]
 		valuation_rate: DF.Currency
 		variant_based_on: DF.Literal["Item Attribute", "Manufacturer"]
 		variant_of: DF.Link | None
@@ -239,6 +239,7 @@ class Item(Document):
 		self.validate_item_defaults()
 		self.validate_auto_reorder_enabled_in_stock_settings()
 		self.cant_change()
+		self.validate_standard_cost_change()
 		self.validate_item_tax_net_rate_range()
 
 		if not self.is_new():
@@ -1060,6 +1061,30 @@ class Item(Document):
 			for d in self.attributes:
 				d.variant_of = self.variant_of
 
+	def validate_standard_cost_change(self):
+		"""Once stock exists, an item's valuation method cannot be switched to or from Standard
+		Cost — either change would leave existing stock valued on a basis the ledger never
+		recorded."""
+		if not self.is_standard_cost_valuation_change():
+			return
+
+		if self.stock_ledger_created():
+			frappe.throw(
+				_(
+					"Valuation Method cannot be changed to or from 'Standard Cost' for {0} because stock transactions already exist for it."
+				).format(frappe.bold(self.name))
+			)
+
+	def is_standard_cost_valuation_change(self):
+		"""True if this save switches the valuation method into or out of Standard Cost."""
+		if self.is_new() or not self.has_value_changed("valuation_method"):
+			return False
+
+		previous = self.get_doc_before_save()
+		was_standard = previous and previous.valuation_method == "Standard Cost"
+		is_standard = self.valuation_method == "Standard Cost"
+		return bool(was_standard or is_standard)
+
 	def cant_change(self):
 		if self.is_new():
 			return
diff --git a/erpnext/stock/doctype/item_default/item_default.json b/erpnext/stock/doctype/item_default/item_default.json
index da74d45eeb6..9b753557dd8 100644
--- a/erpnext/stock/doctype/item_default/item_default.json
+++ b/erpnext/stock/doctype/item_default/item_default.json
@@ -34,6 +34,7 @@
   "default_provisional_account",
   "purchase_expense_account",
   "purchase_expense_contra_account",
+  "purchase_price_variance_account",
   "selling_defaults",
   "column_break_sales",
   "vf_selling_cost_center",
@@ -189,6 +190,14 @@
    "options": "Account",
    "show_description_on_click": 1
   },
+  {
+   "description": "For Standard Cost items: the purchase price vs standard rate difference is booked here. Falls back to the Company's Default Purchase Price Variance Account.",
+   "fieldname": "purchase_price_variance_account",
+   "fieldtype": "Link",
+   "label": "Purchase Price Variance Account",
+   "options": "Account",
+   "show_description_on_click": 1
+  },
   {
    "fieldname": "column_break_purchase",
    "fieldtype": "Column Break"
@@ -356,7 +365,7 @@
  ],
  "istable": 1,
  "links": [],
- "modified": "2026-06-03 17:25:35.982082",
+ "modified": "2026-06-26 10:05:00.000000",
  "modified_by": "Administrator",
  "module": "Stock",
  "name": "Item Default",
diff --git a/erpnext/stock/doctype/item_standard_cost/__init__.py b/erpnext/stock/doctype/item_standard_cost/__init__.py
new file mode 100644
index 00000000000..e69de29bb2d
diff --git a/erpnext/stock/doctype/item_standard_cost/item_standard_cost.js b/erpnext/stock/doctype/item_standard_cost/item_standard_cost.js
new file mode 100644
index 00000000000..f867de3ab67
--- /dev/null
+++ b/erpnext/stock/doctype/item_standard_cost/item_standard_cost.js
@@ -0,0 +1,16 @@
+// Copyright (c) 2026, Frappe Technologies Pvt. Ltd. and contributors
+// For license information, please see license.txt
+
+frappe.ui.form.on("Item Standard Cost", {
+	setup(frm) {
+		// Only allow items whose effective valuation method is "Standard Cost".
+		frm.set_query("item_code", () => {
+			return {
+				query: "erpnext.stock.doctype.item_standard_cost.item_standard_cost.get_standard_cost_items",
+				filters: {
+					company: frm.doc.company,
+				},
+			};
+		});
+	},
+});
diff --git a/erpnext/stock/doctype/item_standard_cost/item_standard_cost.json b/erpnext/stock/doctype/item_standard_cost/item_standard_cost.json
new file mode 100644
index 00000000000..7a0e8ab85c9
--- /dev/null
+++ b/erpnext/stock/doctype/item_standard_cost/item_standard_cost.json
@@ -0,0 +1,138 @@
+{
+ "actions": [],
+ "allow_import": 1,
+ "autoname": "naming_series:",
+ "creation": "2026-06-26 11:00:00.000000",
+ "doctype": "DocType",
+ "editable_grid": 1,
+ "engine": "InnoDB",
+ "field_order": [
+  "naming_series",
+  "item_code",
+  "company",
+  "column_break_main",
+  "standard_rate",
+  "effective_date",
+  "revaluation_section",
+  "revaluation_entry",
+  "amended_from"
+ ],
+ "fields": [
+  {
+   "default": "ISC-.YYYY.-",
+   "fieldname": "naming_series",
+   "fieldtype": "Select",
+   "label": "Series",
+   "options": "ISC-.YYYY.-",
+   "reqd": 1,
+   "set_only_once": 1
+  },
+  {
+   "fieldname": "item_code",
+   "fieldtype": "Link",
+   "in_list_view": 1,
+   "in_standard_filter": 1,
+   "label": "Item",
+   "options": "Item",
+   "reqd": 1,
+   "search_index": 1
+  },
+  {
+   "fieldname": "company",
+   "fieldtype": "Link",
+   "in_list_view": 1,
+   "in_standard_filter": 1,
+   "label": "Company",
+   "options": "Company",
+   "reqd": 1,
+   "search_index": 1
+  },
+  {
+   "fieldname": "column_break_main",
+   "fieldtype": "Column Break"
+  },
+  {
+   "fieldname": "standard_rate",
+   "fieldtype": "Currency",
+   "in_list_view": 1,
+   "label": "Standard Valuation Rate",
+   "options": "Company:company:default_currency",
+   "reqd": 1
+  },
+  {
+   "default": "Today",
+   "fieldname": "effective_date",
+   "fieldtype": "Date",
+   "in_list_view": 1,
+   "label": "Effective Date",
+   "reqd": 1
+  },
+  {
+   "fieldname": "revaluation_section",
+   "fieldtype": "Section Break",
+   "label": "Revaluation"
+  },
+  {
+   "description": "Stock Reconciliation auto-created to revalue on-hand stock to the new standard rate.",
+   "fieldname": "revaluation_entry",
+   "fieldtype": "Link",
+   "label": "Revaluation Entry",
+   "no_copy": 1,
+   "options": "Stock Reconciliation",
+   "read_only": 1
+  },
+  {
+   "fieldname": "amended_from",
+   "fieldtype": "Link",
+   "label": "Amended From",
+   "no_copy": 1,
+   "options": "Item Standard Cost",
+   "print_hide": 1,
+   "read_only": 1,
+   "search_index": 1
+  }
+ ],
+ "index_web_pages_for_search": 1,
+ "is_submittable": 1,
+ "links": [],
+ "modified": "2026-06-26 11:00:00.000000",
+ "modified_by": "Administrator",
+ "module": "Stock",
+ "name": "Item Standard Cost",
+ "naming_rule": "By \"Naming Series\" field",
+ "owner": "Administrator",
+ "permissions": [
+  {
+   "cancel": 1,
+   "create": 1,
+   "delete": 1,
+   "email": 1,
+   "export": 1,
+   "print": 1,
+   "read": 1,
+   "report": 1,
+   "role": "Stock Manager",
+   "share": 1,
+   "submit": 1,
+   "write": 1
+  },
+  {
+   "cancel": 1,
+   "create": 1,
+   "delete": 1,
+   "email": 1,
+   "export": 1,
+   "print": 1,
+   "read": 1,
+   "report": 1,
+   "role": "Accounts Manager",
+   "share": 1,
+   "submit": 1,
+   "write": 1
+  }
+ ],
+ "sort_field": "creation",
+ "sort_order": "DESC",
+ "states": [],
+ "track_changes": 1
+}
diff --git a/erpnext/stock/doctype/item_standard_cost/item_standard_cost.py b/erpnext/stock/doctype/item_standard_cost/item_standard_cost.py
new file mode 100644
index 00000000000..09a00c886d6
--- /dev/null
+++ b/erpnext/stock/doctype/item_standard_cost/item_standard_cost.py
@@ -0,0 +1,299 @@
+# Copyright (c) 2026, Frappe Technologies Pvt. Ltd. and contributors
+# For license information, please see license.txt
+
+import frappe
+from frappe import _
+from frappe.model.document import Document
+from frappe.query_builder.functions import Max
+from frappe.utils import flt, get_datetime, get_link_to_form, getdate, nowtime, today
+from frappe.utils.caching import request_cache
+
+from erpnext.stock.utils import get_valuation_method
+
+
+class ItemStandardCost(Document):
+	# begin: auto-generated types
+	# This code is auto-generated. Do not modify anything in this block.
+
+	from typing import TYPE_CHECKING
+
+	if TYPE_CHECKING:
+		from frappe.types import DF
+
+		amended_from: DF.Link | None
+		company: DF.Link
+		effective_date: DF.Date
+		item_code: DF.Link
+		naming_series: DF.Literal["ISC-.YYYY.-"]
+		revaluation_entry: DF.Link | None
+		standard_rate: DF.Currency
+	# end: auto-generated types
+
+	def validate(self):
+		self.validate_item()
+		self.validate_effective_date()
+		self.validate_rate()
+
+	def validate_item(self):
+		if not frappe.get_cached_value("Item", self.item_code, "is_stock_item"):
+			frappe.throw(_("{0} is not a stock item.").format(frappe.bold(self.item_code)))
+
+		if get_valuation_method(self.item_code, self.company) != "Standard Cost":
+			frappe.throw(
+				_("Valuation Method of Item {0} must be set to 'Standard Cost'.").format(
+					get_link_to_form("Item", self.item_code)
+				)
+			)
+
+	def validate_effective_date(self):
+		# Standard cost is set "as of now"; future-dating would leave a gap where new receipts
+		# are valued at a rate that is not yet effective.
+		if getdate(self.effective_date) > getdate(today()):
+			frappe.throw(_("Effective Date cannot be a future date."))
+
+		# Effective dates must be strictly increasing so the rate history can be read by date.
+		last = self.get_last_standard_cost()
+		if last and getdate(self.effective_date) <= getdate(last.effective_date):
+			frappe.throw(
+				_("Effective Date must be after {0} (the last Standard Cost {1}).").format(
+					frappe.bold(frappe.format(last.effective_date, "Date")),
+					get_link_to_form("Item Standard Cost", last.name),
+				)
+			)
+
+	def validate_rate(self):
+		if flt(self.standard_rate) <= 0:
+			frappe.throw(_("Standard Valuation Rate must be greater than zero."))
+
+		if self.get_last_standard_cost() is None:
+			# First-ever rate for this item+company: only allowed when no stock movement exists,
+			# so the item starts its life under Standard Cost (no historical revaluation needed).
+			if self.has_any_sle():
+				frappe.throw(
+					_(
+						"Standard Cost can only be set up for {0} in {1} before any stock transaction exists."
+					).format(get_link_to_form("Item", self.item_code), frappe.bold(self.company))
+				)
+			return
+
+		# R1: a rate change must be effective on/after the latest stock activity, so the
+		# revaluation entry it creates never sits behind existing transactions.
+		last_sle_date = self.get_last_sle_date()
+		if last_sle_date and getdate(self.effective_date) < getdate(last_sle_date):
+			frappe.throw(
+				_("Effective Date cannot be before the last stock transaction date {0}.").format(
+					frappe.bold(frappe.format(last_sle_date, "Date"))
+				)
+			)
+
+	def on_submit(self):
+		# This record is now the effective rate. Drop any request-cached lookup that may have read the
+		# previous (or missing) rate earlier in the request, so the revaluation below — and anything
+		# else in this request — reads the newly submitted rate.
+		clear_item_standard_rate_cache()
+		self.create_revaluation_entry()
+
+	def before_cancel(self):
+		frappe.throw(
+			_("Item Standard Cost cannot be cancelled. Submit a new record to change the standard rate.")
+		)
+
+	def create_revaluation_entry(self):
+		"""Revalue on-hand stock to the new standard rate via a Stock Reconciliation.
+
+		Submitted atomically: if the reconciliation cannot be submitted (closed period, frozen
+		accounts, etc.) the exception propagates and this submission is rolled back."""
+		balances = self.get_warehouse_wise_balance()
+		if not balances:
+			return
+
+		reco = frappe.new_doc("Stock Reconciliation")
+		reco.company = self.company
+		reco.purpose = "Stock Reconciliation"
+		reco.posting_date = self.effective_date
+		reco.posting_time = self.get_revaluation_posting_time()
+		reco.set_posting_time = 1
+		for row in balances:
+			reco.append(
+				"items",
+				{
+					"item_code": self.item_code,
+					"warehouse": row.warehouse,
+					"qty": row.actual_qty,
+					"valuation_rate": self.standard_rate,
+				},
+			)
+
+		reco.flags.via_item_standard_cost = True
+		reco.insert()
+		reco.submit()
+
+		self.db_set("revaluation_entry", reco.name)
+
+	def get_revaluation_posting_time(self):
+		"""Post the revaluation after the day's last stock movement.
+
+		The reconciliation asserts the current on-hand quantity (Bin.actual_qty). If it were posted
+		before later same-day movements, it would backdate that quantity ahead of them and corrupt the
+		qty/value timeline. Using the time of the last SLE on the effective date (the reconciliation
+		sorts after it on creation) keeps the snapshot at the correct point; if there is no movement
+		that day, the current time is safe since no later movement can exist."""
+		sle = frappe.qb.DocType("Stock Ledger Entry")
+		result = (
+			frappe.qb.from_(sle)
+			.select(Max(sle.posting_datetime))
+			.where(
+				(sle.item_code == self.item_code)
+				& (sle.company == self.company)
+				& (sle.is_cancelled == 0)
+				& (sle.posting_date == getdate(self.effective_date))
+			)
+		).run()
+
+		last_datetime = result[0][0] if result and result[0][0] else None
+		# Keep microsecond precision: posting_datetime is compared at microsecond granularity, so a
+		# truncated time would sort the reco before a same-second movement. Matching the exact time
+		# lets the later creation order the reco after it.
+		return get_datetime(last_datetime).strftime("%H:%M:%S.%f") if last_datetime else nowtime()
+
+	def get_warehouse_wise_balance(self):
+		bin_table = frappe.qb.DocType("Bin")
+		warehouse = frappe.qb.DocType("Warehouse")
+		return (
+			frappe.qb.from_(bin_table)
+			.inner_join(warehouse)
+			.on(bin_table.warehouse == warehouse.name)
+			.select(bin_table.warehouse, bin_table.actual_qty)
+			.where(
+				(bin_table.item_code == self.item_code)
+				& (warehouse.company == self.company)
+				& (bin_table.actual_qty != 0)
+			)
+		).run(as_dict=True)
+
+	def get_last_standard_cost(self):
+		records = frappe.get_all(
+			"Item Standard Cost",
+			filters={
+				"item_code": self.item_code,
+				"company": self.company,
+				"docstatus": 1,
+				"name": ("!=", self.name),
+			},
+			fields=["name", "effective_date"],
+			order_by="effective_date desc, creation desc",
+			limit=1,
+		)
+		return records[0] if records else None
+
+	def get_last_sle_date(self):
+		sle = frappe.qb.DocType("Stock Ledger Entry")
+		result = (
+			frappe.qb.from_(sle)
+			.select(Max(sle.posting_date))
+			.where(
+				(sle.item_code == self.item_code) & (sle.company == self.company) & (sle.is_cancelled == 0)
+			)
+		).run()
+		return result[0][0] if result and result[0][0] else None
+
+	def has_any_sle(self):
+		return bool(
+			frappe.db.exists(
+				"Stock Ledger Entry",
+				{"item_code": self.item_code, "company": self.company, "is_cancelled": 0},
+			)
+		)
+
+
+@request_cache
+def get_item_standard_rate(item_code, company, posting_date=None):
+	"""Return the standard valuation rate effective for `item_code` in `company` as of
+	`posting_date` (defaults to today) — i.e. the latest submitted Item Standard Cost whose
+	effective date is on or before the posting date."""
+	posting_date = posting_date or today()
+
+	rate = frappe.get_all(
+		"Item Standard Cost",
+		filters={
+			"item_code": item_code,
+			"company": company,
+			"docstatus": 1,
+			"effective_date": ("<=", getdate(posting_date)),
+		},
+		fields=["standard_rate"],
+		order_by="effective_date desc, creation desc",
+		limit=1,
+		pluck="standard_rate",
+	)
+
+	return flt(rate[0]) if rate else None
+
+
+def clear_item_standard_rate_cache():
+	"""Drop the request-cached results of `get_item_standard_rate` so reads after a new Item Standard
+	Cost is submitted see the fresh rate instead of a value cached earlier in the same request."""
+	cache = getattr(frappe.local, "request_cache", None)
+	if cache:
+		cache.pop(get_item_standard_rate.__wrapped__, None)
+
+
+def get_purchase_price_variance_account(item_code, company):
+	"""Resolve the Purchase Price Variance account for a Standard Cost item: the per-company
+	Item Default override if set, otherwise the Company default."""
+	account = frappe.db.get_value(
+		"Item Default",
+		{"parent": item_code, "company": company},
+		"purchase_price_variance_account",
+	)
+
+	if not account:
+		account = frappe.get_cached_value("Company", company, "default_purchase_price_variance_account")
+
+	if not account:
+		frappe.throw(
+			_(
+				"Please set a Purchase Price Variance Account for Item {0} or a Default Purchase Price Variance Account in Company {1}."
+			).format(get_link_to_form("Item", item_code), frappe.bold(company))
+		)
+
+	return account
+
+
+@frappe.whitelist()
+@frappe.validate_and_sanitize_search_inputs
+def get_standard_cost_items(
+	doctype: str, txt: str, searchfield: str, start: int, page_len: int, filters: dict | None
+):
+	"""Link-field query for Item Standard Cost: only items whose effective valuation method is
+	'Standard Cost' — i.e. the item is explicitly Standard Cost, or it has no valuation method of its
+	own and the applicable default (Company, else Stock Settings) is Standard Cost. This mirrors
+	get_valuation_method, so every shown item also passes validate_item."""
+	company = (filters or {}).get("company")
+	if company:
+		default_method = frappe.get_cached_value("Company", company, "valuation_method")
+	else:
+		default_method = frappe.db.get_single_value("Stock Settings", "valuation_method")
+
+	if default_method == "Standard Cost":
+		# Items with no method of their own inherit the Standard Cost default.
+		valuation_condition = "and ifnull(item.valuation_method, '') in ('', 'Standard Cost')"
+	else:
+		valuation_condition = "and item.valuation_method = 'Standard Cost'"
+
+	return frappe.db.sql(  # nosemgrep
+		f"""
+		select item.name, item.item_name
+		from `tabItem` item
+		where item.is_stock_item = 1
+			and item.disabled = 0
+			and item.has_variants = 0
+			{valuation_condition}
+			and ({searchfield} like %(txt)s or item.item_name like %(txt)s)
+		order by
+			(case when item.name like %(txt)s then 0 else 1 end),
+			item.name
+		limit %(page_len)s offset %(start)s
+		""",
+		{"txt": f"%{txt}%", "start": start, "page_len": page_len},
+	)
diff --git a/erpnext/stock/doctype/item_standard_cost/test_item_standard_cost.py b/erpnext/stock/doctype/item_standard_cost/test_item_standard_cost.py
new file mode 100644
index 00000000000..c695694eeca
--- /dev/null
+++ b/erpnext/stock/doctype/item_standard_cost/test_item_standard_cost.py
@@ -0,0 +1,487 @@
+# Copyright (c) 2026, Frappe Technologies Pvt. Ltd. and Contributors
+# See license.txt
+
+import frappe
+from frappe.utils import add_days, flt, today
+
+from erpnext.stock.doctype.item.test_item import make_item
+from erpnext.stock.doctype.stock_entry.stock_entry_utils import make_stock_entry
+from erpnext.tests.utils import ERPNextTestSuite
+
+TEST_COMPANY = "_Test Company"
+TEST_WAREHOUSE = "_Test Warehouse - _TC"
+
+# Perpetual-inventory company, needed to assert stock GL entries.
+PI_COMPANY = "_Test Company with perpetual inventory"
+PI_STORES = "Stores - TCP1"
+PI_FG = "Finished Goods - TCP1"
+
+
+def create_standard_cost_item(**properties):
+	props = {"valuation_method": "Standard Cost", "is_stock_item": 1, "is_purchase_item": 1}
+	props.update(properties)
+	return make_item(properties=props)
+
+
+def create_item_standard_cost(item_code, rate, company=TEST_COMPANY, effective_date=None, submit=True):
+	doc = frappe.new_doc("Item Standard Cost")
+	doc.item_code = item_code
+	doc.company = company
+	doc.standard_rate = rate
+	doc.effective_date = effective_date or today()
+	doc.insert()
+	if submit:
+		doc.submit()
+	return doc
+
+
+def ensure_ppv_account(company):
+	"""Ensure `company` has a Default Purchase Price Variance Account so receipts/invoices of
+	Standard Cost items can book the receipt-rate-vs-standard difference."""
+	account = frappe.get_cached_value("Company", company, "default_purchase_price_variance_account")
+	if account:
+		return account
+
+	from erpnext.accounts.doctype.account.test_account import create_account
+
+	# Place it under the same group as the company's default expense account.
+	expense_account = frappe.get_cached_value("Company", company, "default_expense_account")
+	parent_account = frappe.db.get_value("Account", expense_account, "parent_account")
+	account = create_account(
+		account_name="Purchase Price Variance",
+		account_type="Expense Account",
+		parent_account=parent_account,
+		company=company,
+		account_currency=frappe.get_cached_value("Company", company, "default_currency"),
+	)
+	frappe.db.set_value("Company", company, "default_purchase_price_variance_account", account)
+	return account
+
+
+class TestItemStandardCost(ERPNextTestSuite):
+	def setUp(self):
+		ensure_ppv_account(TEST_COMPANY)
+		ensure_ppv_account(PI_COMPANY)
+
+	def test_only_for_standard_cost_items(self):
+		item = make_item(properties={"valuation_method": "FIFO", "is_stock_item": 1})
+		isc = frappe.new_doc("Item Standard Cost")
+		isc.item_code = item.name
+		isc.company = TEST_COMPANY
+		isc.standard_rate = 100
+		self.assertRaises(frappe.ValidationError, isc.insert)
+
+	def test_item_link_query_lists_only_standard_cost_items(self):
+		from erpnext.stock.doctype.item_standard_cost.item_standard_cost import get_standard_cost_items
+
+		sc_item = create_standard_cost_item().name
+		fifo_item = make_item(properties={"valuation_method": "FIFO", "is_stock_item": 1}).name
+
+		def listed(item_code):
+			rows = get_standard_cost_items("Item", item_code, "name", 0, 20, {"company": TEST_COMPANY})
+			return item_code in [row[0] for row in rows]
+
+		self.assertTrue(listed(sc_item))
+		self.assertFalse(listed(fifo_item))
+
+	def test_rate_must_be_positive(self):
+		item = create_standard_cost_item()
+		isc = frappe.new_doc("Item Standard Cost")
+		isc.item_code = item.name
+		isc.company = TEST_COMPANY
+		isc.standard_rate = 0
+		self.assertRaises(frappe.ValidationError, isc.insert)
+
+	def test_future_effective_date_blocked(self):
+		item = create_standard_cost_item()
+		isc = frappe.new_doc("Item Standard Cost")
+		isc.item_code = item.name
+		isc.company = TEST_COMPANY
+		isc.standard_rate = 100
+		isc.effective_date = add_days(today(), 5)
+		self.assertRaises(frappe.ValidationError, isc.insert)
+
+	def test_first_record_requires_no_stock_ledger_entry(self):
+		# An item that already has stock movement cannot be moved onto Standard Cost retroactively.
+		item = make_item(properties={"valuation_method": "FIFO", "is_stock_item": 1})
+		make_stock_entry(item_code=item.name, target=TEST_WAREHOUSE, qty=5, basic_rate=100)
+
+		# Force the method at the db level (the Item-level guard would otherwise block enabling
+		# Standard Cost while stock exists) and drop the cached valuation method.
+		frappe.db.set_value("Item", item.name, "valuation_method", "Standard Cost")
+		frappe.local.request_cache.clear()
+
+		isc = frappe.new_doc("Item Standard Cost")
+		isc.item_code = item.name
+		isc.company = TEST_COMPANY
+		isc.standard_rate = 100
+		self.assertRaises(frappe.ValidationError, isc.insert)
+
+	def test_receipt_valued_at_standard(self):
+		item = create_standard_cost_item()
+		create_item_standard_cost(item.name, rate=100)
+
+		# Receive at a different (billed) rate; the ledger must still value at the standard 100.
+		se = make_stock_entry(item_code=item.name, target=TEST_WAREHOUSE, qty=10, basic_rate=150)
+
+		sle = frappe.get_all(
+			"Stock Ledger Entry",
+			filters={"voucher_no": se.name, "is_cancelled": 0},
+			fields=["valuation_rate", "stock_value", "incoming_rate"],
+		)[0]
+		self.assertEqual(flt(sle.valuation_rate), 100)
+		self.assertEqual(flt(sle.stock_value), 1000)
+		self.assertEqual(flt(sle.incoming_rate), 100)
+
+	def test_rate_change_revalues_on_hand_stock(self):
+		# Effective dates must strictly increase, so stage the rate change on a later date.
+		item = create_standard_cost_item()
+		create_item_standard_cost(item.name, rate=100, effective_date=add_days(today(), -10))
+		make_stock_entry(
+			item_code=item.name,
+			target=TEST_WAREHOUSE,
+			qty=10,
+			basic_rate=100,
+			posting_date=add_days(today(), -5),
+		)
+
+		isc = create_item_standard_cost(item.name, rate=130, effective_date=today())
+
+		# Submitting the new rate must auto-create and submit a revaluation Stock Reconciliation.
+		self.assertTrue(isc.revaluation_entry)
+		reco_status = frappe.db.get_value("Stock Reconciliation", isc.revaluation_entry, "docstatus")
+		self.assertEqual(reco_status, 1)
+
+		stock_value = frappe.db.get_value(
+			"Bin", {"item_code": item.name, "warehouse": TEST_WAREHOUSE}, "stock_value"
+		)
+		self.assertEqual(flt(stock_value), 1300)
+
+	def test_backdated_entry_fast_qty_repost(self):
+		item = create_standard_cost_item()
+		create_item_standard_cost(item.name, rate=100, effective_date=add_days(today(), -10))
+
+		se1 = make_stock_entry(
+			item_code=item.name,
+			target=TEST_WAREHOUSE,
+			qty=10,
+			basic_rate=100,
+			posting_date=add_days(today(), -5),
+		)
+		se2 = make_stock_entry(
+			item_code=item.name,
+			target=TEST_WAREHOUSE,
+			qty=5,
+			basic_rate=100,
+			posting_date=add_days(today(), -2),
+		)
+		se0 = make_stock_entry(
+			item_code=item.name,
+			target=TEST_WAREHOUSE,
+			qty=20,
+			basic_rate=100,
+			posting_date=add_days(today(), -7),
+		)
+
+		def sle(se):
+			return frappe.db.get_value(
+				"Stock Ledger Entry",
+				{"voucher_no": se.name, "is_cancelled": 0},
+				["qty_after_transaction", "stock_value"],
+				as_dict=True,
+			)
+
+		self.assertEqual(flt(sle(se0).qty_after_transaction), 20)
+		self.assertEqual(flt(sle(se1).qty_after_transaction), 30)
+		self.assertEqual(flt(sle(se2).qty_after_transaction), 35)
+		self.assertEqual(flt(sle(se1).stock_value), 3000)
+		self.assertEqual(flt(sle(se2).stock_value), 3500)
+
+		bin_data = frappe.db.get_value(
+			"Bin",
+			{"item_code": item.name, "warehouse": TEST_WAREHOUSE},
+			["actual_qty", "stock_value"],
+			as_dict=True,
+		)
+		self.assertEqual(flt(bin_data.actual_qty), 35)
+		self.assertEqual(flt(bin_data.stock_value), 3500)
+
+		self.assertFalse(frappe.db.exists("Repost Item Valuation", {"voucher_no": se0.name}))
+
+	def test_cannot_cancel(self):
+		item = create_standard_cost_item()
+		isc = create_item_standard_cost(item.name, rate=100)
+		self.assertRaises(frappe.ValidationError, isc.cancel)
+
+	def test_direct_stock_reconciliation_blocked(self):
+		from erpnext.stock.doctype.stock_reconciliation.test_stock_reconciliation import (
+			create_stock_reconciliation,
+		)
+
+		item = create_standard_cost_item()
+		create_item_standard_cost(item.name, rate=100)
+		make_stock_entry(item_code=item.name, target=TEST_WAREHOUSE, qty=10, basic_rate=100)
+
+		self.assertRaises(
+			frappe.ValidationError,
+			create_stock_reconciliation,
+			item_code=item.name,
+			warehouse=TEST_WAREHOUSE,
+			qty=8,
+			rate=120,
+		)
+
+	def test_backdated_transaction_blocked(self):
+		item = create_standard_cost_item()
+		create_item_standard_cost(item.name, rate=100, effective_date=today())
+
+		# R2 is enforced when the stock ledger entries are written, i.e. at submit time.
+		se = make_stock_entry(
+			item_code=item.name,
+			target=TEST_WAREHOUSE,
+			qty=10,
+			basic_rate=100,
+			posting_date=add_days(today(), -3),
+			do_not_submit=True,
+		)
+		self.assertRaises(frappe.ValidationError, se.submit)
+
+	def test_manufacturing_variance_books_to_stock_adjustment(self):
+		# RM standard 50, FG standard 200. Consuming 5 RM (250) to produce 1 FG (200) leaves a
+		# 50 manufacturing variance, which must land in the company's Stock Adjustment account.
+		rm = create_standard_cost_item()
+		fg = create_standard_cost_item()
+		create_item_standard_cost(rm.name, rate=50, company=PI_COMPANY)
+		create_item_standard_cost(fg.name, rate=200, company=PI_COMPANY)
+
+		make_stock_entry(item_code=rm.name, to_warehouse=PI_STORES, company=PI_COMPANY, qty=10, basic_rate=50)
+
+		se = frappe.new_doc("Stock Entry")
+		se.purpose = "Repack"
+		se.stock_entry_type = "Repack"
+		se.company = PI_COMPANY
+		se.append("items", {"item_code": rm.name, "s_warehouse": PI_STORES, "qty": 5})
+		se.append("items", {"item_code": fg.name, "t_warehouse": PI_FG, "qty": 1, "is_finished_item": 1})
+		se.insert()
+		se.submit()
+
+		# FG is valued at its own standard, not the rolled-up RM cost.
+		fg_sle = frappe.db.get_value(
+			"Stock Ledger Entry",
+			{"voucher_no": se.name, "item_code": fg.name, "is_cancelled": 0},
+			["valuation_rate", "stock_value_difference"],
+			as_dict=True,
+		)
+		self.assertEqual(flt(fg_sle.valuation_rate), 200)
+		self.assertEqual(flt(fg_sle.stock_value_difference), 200)
+
+		stock_adj = frappe.get_cached_value("Company", PI_COMPANY, "stock_adjustment_account")
+		net = frappe.db.sql(
+			"select sum(debit - credit) from `tabGL Entry` where voucher_no=%s and account=%s",
+			(se.name, stock_adj),
+		)[0][0]
+		self.assertEqual(flt(net), 50)
+
+	def test_valuation_method_change_blocked_with_stock(self):
+		item = create_standard_cost_item()
+		create_item_standard_cost(item.name, rate=100)
+		make_stock_entry(item_code=item.name, target=TEST_WAREHOUSE, qty=10, basic_rate=100)
+
+		item.reload()
+		item.valuation_method = "FIFO"
+		self.assertRaises(frappe.ValidationError, item.save)
+
+	def test_batched_item_revalued_across_warehouses(self):
+		# A rate change must revalue a batched Standard Cost item in every warehouse, posted as a
+		# pure value change without a serial/batch bundle.
+		item = create_standard_cost_item(
+			has_batch_no=1, create_new_batch=1, batch_number_series="SC-BATCH-.####"
+		)
+		create_item_standard_cost(
+			item.name, rate=100, company=PI_COMPANY, effective_date=add_days(today(), -5)
+		)
+
+		make_stock_entry(
+			item_code=item.name,
+			to_warehouse=PI_STORES,
+			company=PI_COMPANY,
+			qty=3,
+			basic_rate=100,
+			use_serial_batch_fields=1,
+			posting_date=add_days(today(), -3),
+		)
+		make_stock_entry(
+			item_code=item.name,
+			to_warehouse=PI_FG,
+			company=PI_COMPANY,
+			qty=2,
+			basic_rate=100,
+			use_serial_batch_fields=1,
+			posting_date=add_days(today(), -3),
+		)
+
+		isc = create_item_standard_cost(item.name, rate=150, company=PI_COMPANY, effective_date=today())
+		self.assertTrue(isc.revaluation_entry)
+
+		for warehouse, qty in ((PI_STORES, 3), (PI_FG, 2)):
+			stock_value = frappe.db.get_value(
+				"Bin", {"item_code": item.name, "warehouse": warehouse}, "stock_value"
+			)
+			self.assertEqual(flt(stock_value), qty * 150)
+
+	def test_serialized_item_revalued_across_warehouses(self):
+		item = create_standard_cost_item(has_serial_no=1, serial_no_series="SC-SER-.####")
+		create_item_standard_cost(
+			item.name, rate=100, company=PI_COMPANY, effective_date=add_days(today(), -5)
+		)
+
+		make_stock_entry(
+			item_code=item.name,
+			to_warehouse=PI_STORES,
+			company=PI_COMPANY,
+			qty=3,
+			basic_rate=100,
+			use_serial_batch_fields=1,
+			posting_date=add_days(today(), -3),
+		)
+		make_stock_entry(
+			item_code=item.name,
+			to_warehouse=PI_FG,
+			company=PI_COMPANY,
+			qty=2,
+			basic_rate=100,
+			use_serial_batch_fields=1,
+			posting_date=add_days(today(), -3),
+		)
+
+		isc = create_item_standard_cost(item.name, rate=150, company=PI_COMPANY, effective_date=today())
+		self.assertTrue(isc.revaluation_entry)
+
+		for warehouse, qty in ((PI_STORES, 3), (PI_FG, 2)):
+			stock_value = frappe.db.get_value(
+				"Bin", {"item_code": item.name, "warehouse": warehouse}, "stock_value"
+			)
+			self.assertEqual(flt(stock_value), qty * 150)
+
+	def test_standard_rate_cache_invalidated_after_submit(self):
+		from erpnext.stock.doctype.item_standard_cost.item_standard_cost import get_item_standard_rate
+
+		item = create_standard_cost_item()
+
+		# Read (and request-cache) the rate before any Item Standard Cost exists.
+		self.assertIsNone(get_item_standard_rate(item.name, TEST_COMPANY))
+
+		create_item_standard_cost(item.name, rate=100)
+
+		# The submit must have invalidated the cache, so this reads the freshly submitted rate.
+		self.assertEqual(flt(get_item_standard_rate(item.name, TEST_COMPANY)), 100)
+
+	def test_pr_stock_value_excludes_rejected_warehouse(self):
+		# Accepted and rejected stock for one receipt row share voucher_detail_no. The standard-cost
+		# SRBNB split must clear only the accepted warehouse's value, not accepted + rejected.
+		from erpnext.accounts.doctype.purchase_invoice.services.gl_composer import (
+			PurchaseInvoiceGLComposer,
+		)
+		from erpnext.stock.doctype.purchase_receipt.test_purchase_receipt import make_purchase_receipt
+		from erpnext.stock.doctype.warehouse.test_warehouse import create_warehouse
+
+		item = create_standard_cost_item()
+		create_item_standard_cost(item.name, rate=100, company=PI_COMPANY)
+
+		rejected_warehouse = create_warehouse("_Test SC Rejected Warehouse", company=PI_COMPANY)
+
+		# Receive 10 accepted + 2 rejected at a billed rate of 150; both SLEs value at the standard 100.
+		pr = make_purchase_receipt(
+			item_code=item.name,
+			company=PI_COMPANY,
+			warehouse=PI_STORES,
+			qty=10,
+			rejected_qty=2,
+			rejected_warehouse=rejected_warehouse,
+			rate=150,
+		)
+
+		# Method body uses only `item`, so it can be called unbound.
+		def pr_value(stock_qty):
+			mock_item = frappe._dict(
+				purchase_receipt=pr.name, pr_detail=pr.items[0].name, stock_qty=stock_qty
+			)
+			return flt(PurchaseInvoiceGLComposer.get_pr_stock_value(None, mock_item))
+
+		# Billing all 10: accepted only (10 * 100), not accepted + rejected (12 * 100).
+		self.assertEqual(pr_value(10), 1000)
+		# Billing only 4 of the 10 accepted units: pro-rated to the invoiced qty (4 * 100).
+		self.assertEqual(pr_value(4), 400)
+
+	def test_pr_books_variance_to_ppv_account(self):
+		# Receiving a Standard Cost item at a rate above the standard must book the difference to the
+		# Purchase Price Variance account, not the default expense (COGS) account.
+		from erpnext.stock.doctype.purchase_receipt.test_purchase_receipt import make_purchase_receipt
+
+		ppv_account = ensure_ppv_account(PI_COMPANY)
+		cogs_account = frappe.get_cached_value("Company", PI_COMPANY, "default_expense_account")
+
+		item = create_standard_cost_item()
+		create_item_standard_cost(item.name, rate=130, company=PI_COMPANY)
+
+		# Receive 1 @ 200: stock booked at standard 130, the 70 difference is the purchase price variance.
+		pr = make_purchase_receipt(
+			item_code=item.name, company=PI_COMPANY, warehouse=PI_STORES, qty=1, rate=200
+		)
+
+		def booked(account):
+			return flt(
+				frappe.db.sql(
+					"select sum(debit - credit) from `tabGL Entry` where voucher_no=%s and account=%s and is_cancelled=0",
+					(pr.name, account),
+				)[0][0]
+			)
+
+		self.assertEqual(booked(ppv_account), 70)
+		self.assertEqual(booked(cogs_account), 0)
+
+	def test_pr_throws_without_ppv_account(self):
+		# Receiving a Standard Cost item with a variance but no PPV account configured must error.
+		from erpnext.stock.doctype.purchase_receipt.test_purchase_receipt import make_purchase_receipt
+
+		previous = frappe.get_cached_value("Company", PI_COMPANY, "default_purchase_price_variance_account")
+		frappe.db.set_value("Company", PI_COMPANY, "default_purchase_price_variance_account", None)
+		frappe.clear_cache(doctype="Company")
+		try:
+			item = create_standard_cost_item()
+			create_item_standard_cost(item.name, rate=130, company=PI_COMPANY)
+			self.assertRaises(
+				frappe.ValidationError,
+				make_purchase_receipt,
+				item_code=item.name,
+				company=PI_COMPANY,
+				warehouse=PI_STORES,
+				qty=1,
+				rate=200,
+			)
+		finally:
+			frappe.db.set_value("Company", PI_COMPANY, "default_purchase_price_variance_account", previous)
+			frappe.clear_cache(doctype="Company")
+
+	def test_revaluation_posted_after_same_day_movement(self):
+		# A movement earlier on the effective date must not end up after the revaluation, otherwise the
+		# reco would backdate the current quantity ahead of it.
+		item = create_standard_cost_item()
+		create_item_standard_cost(item.name, rate=100, effective_date=add_days(today(), -2))
+
+		se = make_stock_entry(
+			item_code=item.name, target=TEST_WAREHOUSE, qty=10, basic_rate=100, posting_date=today()
+		)
+
+		isc = create_item_standard_cost(item.name, rate=150, effective_date=today())
+
+		reco_time = frappe.db.get_value("Stock Reconciliation", isc.revaluation_entry, "posting_time")
+		se_time = frappe.db.get_value(
+			"Stock Ledger Entry", {"voucher_no": se.name, "is_cancelled": 0}, "posting_time"
+		)
+		self.assertGreaterEqual(str(reco_time), str(se_time))
+
+		stock_value = frappe.db.get_value(
+			"Bin", {"item_code": item.name, "warehouse": TEST_WAREHOUSE}, "stock_value"
+		)
+		self.assertEqual(flt(stock_value), 1500)
diff --git a/erpnext/stock/doctype/purchase_receipt/services/gl_composer.py b/erpnext/stock/doctype/purchase_receipt/services/gl_composer.py
index 4af4c93bd6d..7cd7e3d2622 100644
--- a/erpnext/stock/doctype/purchase_receipt/services/gl_composer.py
+++ b/erpnext/stock/doctype/purchase_receipt/services/gl_composer.py
@@ -240,13 +240,7 @@ class PurchaseReceiptGLComposer(BaseStockGLComposer):
 				divisional_loss -= rejected_item_cost
 
 			if divisional_loss:
-				loss_account = (
-					doc.get_company_default("default_expense_account", ignore_validation=True)
-					or stock_asset_rbnb
-				)
-
-				if doc.is_return and item.expense_account:
-					loss_account = item.expense_account
+				loss_account = self.get_divisional_loss_account(item, stock_asset_rbnb)
 
 				cost_center = item.cost_center or frappe.get_cached_value(
 					"Company", doc.company, "cost_center"
@@ -359,6 +353,30 @@ class PurchaseReceiptGLComposer(BaseStockGLComposer):
 				+ "\n".join(warehouse_with_no_account)
 			)
 
+	def get_divisional_loss_account(self, item, stock_asset_rbnb):
+		"""Account that absorbs the difference between the document value and the value actually
+		booked into stock. For a Standard Cost item this difference is a purchase price variance
+		(receipt rate vs standard rate), so it goes to the Purchase Price Variance account; for all
+		other items it keeps the existing behaviour (default expense account, or the item's expense
+		account on a return)."""
+		from erpnext.stock.utils import get_valuation_method
+
+		doc = self.doc
+		if item.item_code and get_valuation_method(item.item_code, doc.company) == "Standard Cost":
+			from erpnext.stock.doctype.item_standard_cost.item_standard_cost import (
+				get_purchase_price_variance_account,
+			)
+
+			return get_purchase_price_variance_account(item.item_code, doc.company)
+
+		loss_account = (
+			doc.get_company_default("default_expense_account", ignore_validation=True) or stock_asset_rbnb
+		)
+		if doc.is_return and item.expense_account:
+			loss_account = item.expense_account
+
+		return loss_account
+
 	def _make_tax_gl_entries(self, gl_entries: list, via_landed_cost_voucher: bool = False) -> None:
 		doc = self.doc
 		negative_expense_to_be_booked = sum([flt(d.item_tax_amount) for d in doc.get("items")])
diff --git a/erpnext/stock/doctype/stock_ledger_entry/stock_ledger_entry.py b/erpnext/stock/doctype/stock_ledger_entry/stock_ledger_entry.py
index 99363c760f9..8ec74a3df4d 100644
--- a/erpnext/stock/doctype/stock_ledger_entry/stock_ledger_entry.py
+++ b/erpnext/stock/doctype/stock_ledger_entry/stock_ledger_entry.py
@@ -234,12 +234,21 @@ class StockLedgerEntry(Document):
 			self.throw_error_message(f"Item {self.item_code} must be a stock Item")
 
 		if item_detail.has_serial_no or item_detail.has_batch_no:
-			if not self.serial_and_batch_bundle:
+			if not self.serial_and_batch_bundle and not self.is_standard_cost_revaluation():
 				self.throw_error_message(f"Serial No / Batch No are mandatory for Item {self.item_code}")
 
 		if self.serial_and_batch_bundle and not item_detail.has_serial_no and not item_detail.has_batch_no:
 			self.throw_error_message(f"Serial No and Batch No are not allowed for Item {self.item_code}")
 
+	def is_standard_cost_revaluation(self):
+		"""A Standard Cost item is revalued through a Stock Reconciliation that changes the rate only
+		(qty unchanged); it carries no serial/batch bundle, so the bundle requirement is bypassed."""
+		from erpnext.stock.doctype.stock_reconciliation.stock_reconciliation import is_standard_cost_item
+
+		return self.voucher_type == "Stock Reconciliation" and is_standard_cost_item(
+			self.item_code, self.company
+		)
+
 	def throw_error_message(self, message, exception=frappe.ValidationError):
 		frappe.throw(_(message), exception)
 
diff --git a/erpnext/stock/doctype/stock_reconciliation/stock_reconciliation.py b/erpnext/stock/doctype/stock_reconciliation/stock_reconciliation.py
index d165b802889..5bba06f9a67 100644
--- a/erpnext/stock/doctype/stock_reconciliation/stock_reconciliation.py
+++ b/erpnext/stock/doctype/stock_reconciliation/stock_reconciliation.py
@@ -7,7 +7,7 @@ from datetime import timedelta
 import frappe
 from frappe import _, bold, json, msgprint
 from frappe.query_builder.functions import Sum
-from frappe.utils import add_to_date, cint, cstr, flt, now
+from frappe.utils import add_to_date, cint, cstr, flt, get_link_to_form, now
 from frappe.utils.data import DateTimeLikeObject
 
 import erpnext
@@ -21,7 +21,7 @@ from erpnext.stock.doctype.serial_and_batch_bundle.serial_and_batch_bundle impor
 )
 from erpnext.stock.doctype.serial_no.serial_no import get_serial_nos
 from erpnext.stock.doctype.stock_reconciliation_item.stock_reconciliation_item import StockReconciliationItem
-from erpnext.stock.utils import get_incoming_rate, get_stock_balance
+from erpnext.stock.utils import get_incoming_rate, get_stock_balance, get_valuation_method
 
 
 class OpeningEntryAccountError(frappe.ValidationError):
@@ -71,6 +71,7 @@ class StockReconciliation(StockController):
 
 		sbb = SerialBatchBundleService(self)
 
+		self.validate_standard_cost_items()
 		self.validate_items_exist()
 		if not self.expense_account:
 			self.expense_account = frappe.get_cached_value(
@@ -172,6 +173,20 @@ class StockReconciliation(StockController):
 					}
 				)
 
+	def validate_standard_cost_items(self):
+		"""Stock Reconciliation is not allowed for Standard Cost items — their rate is changed
+		only through the Item Standard Cost doctype (which creates the revaluation reco itself)."""
+		if self.flags.via_item_standard_cost:
+			return
+
+		for item in self.items:
+			if item.item_code and is_standard_cost_item(item.item_code, self.company):
+				frappe.throw(
+					_(
+						"Row #{0}: Stock Reconciliation is not allowed for Item {1}, which uses the Standard Cost valuation method. Change its rate through Item Standard Cost instead."
+					).format(item.idx, get_link_to_form("Item", item.item_code))
+				)
+
 	def set_current_serial_and_batch_bundle(self, voucher_detail_no=None, save=False) -> None:
 		"""Set Serial and Batch Bundle for each item"""
 		for item in self.items:
@@ -181,6 +196,12 @@ class StockReconciliation(StockController):
 			if not item.item_code:
 				continue
 
+			# Standard Cost revaluation recos are pure value changes: qty is unchanged and the SLE is
+			# revalued at the standard rate, so no serial/batch bundle is created (see update_stock_ledger,
+			# which routes these rows through the single revaluation SLE path).
+			if is_standard_cost_item(item.item_code, self.company):
+				continue
+
 			item_details = frappe.get_cached_value(
 				"Item", item.item_code, ["has_serial_no", "has_batch_no"], as_dict=1
 			)
@@ -431,6 +452,10 @@ class StockReconciliation(StockController):
 			if not item.item_code:
 				continue
 
+			# Standard Cost revaluation recos are pure value changes; no serial/batch bundle needed.
+			if is_standard_cost_item(item.item_code, self.company):
+				continue
+
 			if item.use_serial_batch_fields:
 				continue
 
@@ -551,7 +576,9 @@ class StockReconciliation(StockController):
 				if item.valuation_rate is None:
 					item.valuation_rate = item_dict.get("rate")
 
-				if item_dict.get("serial_nos"):
+				# Standard Cost items are revalued by rate only; don't pull serial nos onto the row, or a
+				# serial/batch bundle would be built for what must stay a pure value-change SLE.
+				if item_dict.get("serial_nos") and not is_standard_cost_item(item.item_code, self.company):
 					item.current_serial_no = item_dict.get("serial_nos")
 					if self.purpose == "Stock Reconciliation" and not item.serial_no and item.qty:
 						item.serial_no = item.current_serial_no
@@ -767,7 +794,12 @@ class StockReconciliation(StockController):
 				"Item", row.item_code, ["has_serial_no", "has_batch_no"], as_dict=1
 			)
 
-			if item.has_serial_no or item.has_batch_no:
+			# A Standard Cost item is revalued by rate alone (qty unchanged, valuation from the standard
+			# rate), so even a serialized/batched one is posted through the single revaluation SLE path
+			# without a serial/batch bundle, the same as a non-serial item.
+			if (item.has_serial_no or item.has_batch_no) and not is_standard_cost_item(
+				row.item_code, self.company
+			):
 				self.get_sle_for_serialized_items(row, sl_entries)
 			else:
 				if row.serial_and_batch_bundle:
@@ -1134,6 +1166,10 @@ class StockReconciliation(StockController):
 			self._cancel()
 
 
+def is_standard_cost_item(item_code, company):
+	return get_valuation_method(item_code, company) == "Standard Cost"
+
+
 @frappe.whitelist()
 def get_items(
 	warehouse: str,
diff --git a/erpnext/stock/doctype/stock_settings/stock_settings.json b/erpnext/stock/doctype/stock_settings/stock_settings.json
index f9b46cf6e4f..48981955052 100644
--- a/erpnext/stock/doctype/stock_settings/stock_settings.json
+++ b/erpnext/stock/doctype/stock_settings/stock_settings.json
@@ -134,7 +134,7 @@
    "fieldname": "valuation_method",
    "fieldtype": "Select",
    "label": "Default Valuation Method",
-   "options": "FIFO\nMoving Average\nLIFO"
+   "options": "FIFO\nMoving Average\nLIFO\nStandard Cost"
   },
   {
    "description": "The percentage you are allowed to receive or deliver more against the quantity ordered. For example, if you have ordered 100 units, and your Allowance is 10%, then you are allowed to receive 110 units.",
@@ -602,7 +602,7 @@
  "index_web_pages_for_search": 1,
  "issingle": 1,
  "links": [],
- "modified": "2026-06-13 12:38:02.202183",
+ "modified": "2026-06-26 10:00:00.000000",
  "modified_by": "Administrator",
  "module": "Stock",
  "name": "Stock Settings",
diff --git a/erpnext/stock/serial_batch_bundle.py b/erpnext/stock/serial_batch_bundle.py
index 9d0ad704480..5eef60dcc1a 100644
--- a/erpnext/stock/serial_batch_bundle.py
+++ b/erpnext/stock/serial_batch_bundle.py
@@ -1342,6 +1342,15 @@ class SerialBatchCreation:
 	def set_serial_batch_entries(self, doc):
 		incoming_rate = self.get("incoming_rate")
 
+		standard_rate = self.get_standard_cost_rate()
+		if standard_rate is not None:
+			# Standard Cost values every serial/batch at the same rate, so the bundle entries
+			# must carry the standard rate (not the document/billed rate) to stay consistent
+			# with the standard-valued Stock Ledger Entry.
+			incoming_rate = standard_rate
+			self.serial_nos_valuation = None
+			self.batches_valuation = None
+
 		precision = frappe.get_precision("Serial and Batch Entry", "qty")
 		if self.get("serial_nos"):
 			serial_no_wise_batch = frappe._dict({})
@@ -1378,6 +1387,25 @@ class SerialBatchCreation:
 					},
 				)
 
+	def get_standard_cost_rate(self):
+		"""Return the standard valuation rate for the item if its valuation method is
+		Standard Cost, else None — used to value bundle entries at standard."""
+		from erpnext.stock.doctype.item_standard_cost.item_standard_cost import get_item_standard_rate
+		from erpnext.stock.utils import get_valuation_method
+
+		company = self.get("company")
+		if not company and self.get("warehouse"):
+			company = frappe.get_cached_value("Warehouse", self.warehouse, "company")
+
+		if not company or get_valuation_method(self.item_code, company) != "Standard Cost":
+			return None
+
+		posting_date = self.get("posting_date")
+		if not posting_date and self.get("posting_datetime"):
+			posting_date = getdate(self.posting_datetime)
+
+		return get_item_standard_rate(self.item_code, company, posting_date)
+
 	def create_batch(self):
 		from erpnext.stock.doctype.batch.batch import make_batch
 
diff --git a/erpnext/stock/stock_ledger.py b/erpnext/stock/stock_ledger.py
index d444da767e5..c5ecdc130fa 100644
--- a/erpnext/stock/stock_ledger.py
+++ b/erpnext/stock/stock_ledger.py
@@ -17,6 +17,7 @@ from frappe.utils import (
 	format_date,
 	get_datetime,
 	get_link_to_form,
+	getdate,
 	now,
 	nowdate,
 	nowtime,
@@ -53,6 +54,52 @@ class SerialNoExistsInFutureTransaction(frappe.ValidationError):
 	pass
 
 
+def validate_standard_cost_posting_date(sl_entries):
+	"""R2: a Standard Cost item's stock transaction cannot be dated before the latest Item
+	Standard Cost effective date. A backdated entry would slip in behind the standard-rate
+	revaluation, making its on-hand snapshot stale and forcing a repost — which Standard Cost
+	deliberately avoids. Enforced here so every stock voucher is covered uniformly."""
+	from erpnext.stock.utils import get_valuation_method
+
+	checked = {}
+	for sle in sl_entries:
+		item_code = sle.get("item_code")
+		company = sle.get("company")
+		posting_date = sle.get("posting_date")
+		if not item_code or not company or not posting_date:
+			continue
+
+		key = (item_code, company)
+		if key not in checked:
+			latest_isc = None
+			if get_valuation_method(item_code, company) == "Standard Cost":
+				latest_isc = frappe.db.get_value(
+					"Item Standard Cost",
+					{"item_code": item_code, "company": company, "docstatus": 1},
+					["name", "effective_date"],
+					order_by="effective_date desc",
+					as_dict=True,
+				)
+			checked[key] = latest_isc
+
+		latest_isc = checked[key]
+		if latest_isc and getdate(posting_date) < getdate(latest_isc.effective_date):
+			effective_date = frappe.bold(frappe.format(latest_isc.effective_date, "Date"))
+			frappe.throw(
+				_(
+					"Cannot post Standard Cost item {0} on {1}: it is before {2}, the effective date of its latest Standard Valuation Rate {3}."
+				).format(
+					get_link_to_form("Item", item_code),
+					frappe.bold(frappe.format(posting_date, "Date")),
+					effective_date,
+					get_link_to_form("Item Standard Cost", latest_isc.name),
+				)
+				+ "<br><br>"
+				+ _("Post this entry on or after {0}.").format(effective_date),
+				title=_("Backdated Entry Not Allowed"),
+			)
+
+
 def make_sl_entries(sl_entries, allow_negative_stock=False, via_landed_cost_voucher=False):
 	"""Create SL entries from SL entry dicts
 
@@ -71,6 +118,8 @@ def make_sl_entries(sl_entries, allow_negative_stock=False, via_landed_cost_vouc
 		if cancelled:
 			validate_cancellation(sl_entries)
 			set_as_cancel(sl_entries[0].get("voucher_type"), sl_entries[0].get("voucher_no"))
+		else:
+			validate_standard_cost_posting_date(sl_entries)
 
 		args = get_args_for_future_sle(sl_entries[0])
 		future_sle_exists(args, sl_entries)
@@ -843,6 +892,29 @@ class update_entries_after:
 				indicator="blue",
 			)
 
+	def process_standard_cost(self, sle):
+		from erpnext.stock.doctype.item_standard_cost.item_standard_cost import get_item_standard_rate
+
+		rate = get_item_standard_rate(sle.item_code, self.company, sle.posting_date)
+		if rate is None:
+			frappe.throw(
+				_(
+					"No Standard Valuation Rate found for Item {0} in Company {1} as on {2}. Please create an Item Standard Cost record."
+				).format(bold(sle.item_code), bold(self.company), bold(sle.posting_date))
+			)
+
+		if sle.voucher_type == "Stock Reconciliation" and sle.get("qty_after_transaction") is not None:
+			self.wh_data.qty_after_transaction = flt(sle.qty_after_transaction)
+		else:
+			self.wh_data.qty_after_transaction += flt(sle.actual_qty)
+
+		self.wh_data.valuation_rate = rate
+		self.wh_data.stock_value = flt(self.wh_data.qty_after_transaction) * flt(rate)
+		self.wh_data.stock_queue = [[self.wh_data.qty_after_transaction, rate]]
+
+		if flt(sle.actual_qty) > 0:
+			sle.incoming_rate = rate
+
 	def process_sle(self, sle):
 		# previous sle data for this warehouse
 		key = (sle.item_code, sle.warehouse)
@@ -897,7 +969,11 @@ class update_entries_after:
 				if sle.get(dimension.get("fieldname")):
 					has_dimensions = True
 
-		if sle.serial_and_batch_bundle:
+		if self.valuation_method == "Standard Cost":
+			# Inventory is always carried at the standard rate effective on the posting date;
+			# FIFO/Moving Average/serial-batch valuation is bypassed entirely.
+			self.process_standard_cost(sle)
+		elif sle.serial_and_batch_bundle:
 			self.calculate_valuation_for_serial_batch_bundle(sle)
 		elif sle.serial_no and not self.args.get("sle_id"):
 			# Only run in reposting
@@ -2065,21 +2141,50 @@ def update_qty_in_future_sle(args, allow_negative_stock=False):
 		detail = next_stock_reco_detail[0]
 		datetime_limit_condition = get_datetime_limit_condition(detail)
 
-	frappe.db.sql(  # nosemgrep
-		f"""
-		update `tabStock Ledger Entry`
-		set qty_after_transaction = qty_after_transaction + {qty_shift}
-		where
-			item_code = %(item_code)s
-			and warehouse = %(warehouse)s
-			and is_cancelled = 0
-			and (
-				posting_datetime > %(posting_datetime)s
-			)
-			{datetime_limit_condition}
-		""",
-		args,
-	)
+	if get_valuation_method(args.get("item_code"), args.get("company")) == "Standard Cost":
+		# Standard Cost inventory is always carried at the standard rate, so a backdated entry only
+		# shifts future balances — no full repost is needed. Update qty and value in place:
+		# stock_value = qty_after_transaction * standard rate, which is constant across this range
+		# (a rate change posts a reconciliation that bounds it). stock_value_difference is unchanged
+		# because every future balance shifts by the same amount.
+		from erpnext.stock.doctype.item_standard_cost.item_standard_cost import get_item_standard_rate
+
+		standard_rate = flt(
+			get_item_standard_rate(args.get("item_code"), args.get("company"), args.get("posting_date"))
+		)
+
+		frappe.db.sql(  # nosemgrep
+			f"""
+			update `tabStock Ledger Entry`
+			set stock_value = (qty_after_transaction + {qty_shift}) * {standard_rate},
+				qty_after_transaction = qty_after_transaction + {qty_shift}
+			where
+				item_code = %(item_code)s
+				and warehouse = %(warehouse)s
+				and is_cancelled = 0
+				and (
+					posting_datetime > %(posting_datetime)s
+				)
+				{datetime_limit_condition}
+			""",
+			args,
+		)
+	else:
+		frappe.db.sql(  # nosemgrep
+			f"""
+			update `tabStock Ledger Entry`
+			set qty_after_transaction = qty_after_transaction + {qty_shift}
+			where
+				item_code = %(item_code)s
+				and warehouse = %(warehouse)s
+				and is_cancelled = 0
+				and (
+					posting_datetime > %(posting_datetime)s
+				)
+				{datetime_limit_condition}
+			""",
+			args,
+		)
 
 	validate_negative_qty_in_future_sle(args, allow_negative_stock)