|Pathfinder Design Team Official Rules Response|
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The FAQ has received an official adjustment. The answer now reads:
First add up the total cost of the base item, including any special material. Then multiply by any multiplier for the size and unusual shape from Table 6-8. After that, add any additional cost for masterwork, if that isn't already part of the special material. Finally, apply any multiplier for discounts such as the 1/3 cost multiplier for crafting the item. For example, a chain shirt costs 100 gp and a mithral chain shirt costs 1,100 gp after the +1,000 gp cost for mithral. If you were applying the 1/3 cost multiplier for crafting the item using the Craft skill, the cost multiplier from Table 6-8 based on size and body type, or both, you would apply those multipliers to the full 1,100 gp cost for the mithral chain shirt. This means a mithral chain shirt built for a rune giant costs 8,800 gp and a mithral chain shirt built for the tarrasque costs 35,200 gp. On the other hand, a Large masterwork cold iron greatsword costs 500 gp (50 gp for a greatsword, doubled for cold iron, doubled again for a Large weapon, then adding masterwork last because cold iron isn't always masterwork).