This question is about properly setting up item cost for floor stock items.

In Oracle Doc 862262.1 the section titled "Cost Ledger (P4105)" says:

"Establish a cost method other than the one used for inventory items that will be included in standard costs.  For example, if 08 cost method is used as the purchasing cost method for items that are rolled up into standard costs, create and use another number for bulk/floor stock items (use a number greater than 19).

If the same cost method is used for floor stock, the cost of these items is included when standard costs are established.  Since floor stock items with the setup described here are never issued, a material variance will always be generated."