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Evo-ERP and DBA Classic >> Manufacturing >> Unit Cost
http://www.istechforum.com/YaBB.pl?num=1227546658

Message started by Irma on 11/24/08 at 10:10:57

Title: Unit Cost
Post by Irma on 11/24/08 at 10:10:57

Inventory item had a book value of $100 for 8 items (on hand) giving an AvgCost of $12.50 each (Received not invoiced).

FYI: PO was issued for 10 items (total $125.00 at $12.50 each). 10 were Received not Invoiced when invoiced was posted 2 out of 10 were allocated to a WO. Those parts were new with no history that could change the average.

For testing purposes The items were invoiced at $150 (total cost was changed from $125.00 - per PO - to $150.00 when posting invoice in AP-C). After posting took place Book value went up to $125.00 and the Average cost from $12.50 to $15.6250. I was expecting an average of $15.00 (150.00 invoiced divided on 10 items) why it is showing $15.62?

I run other test and average came up as expected. Please explain.

Title: Re: Unit Cost
Post by GasGiant on 11/24/08 at 12:04:39

It looks like the two issued to the WO went out at $12.50 BEFORE the cost adjustment, therefore leaving only 8 items over which to spread the cost adjustment of $25

One of the hazards of cost adjustments. They cannot update completed transactions.

Title: Re: Unit Cost
Post by Irma on 11/24/08 at 12:49:06

More than likely the cost for the 2 allocated units will be lower, but my concern is related to the average calculation.

2 items at $12.50 will be $25.00
8 items at $15.00 will be $120.00.
$145.00 divided by 10 will be $14.50. The average should be $14.5 (from that point of view).

In fact the total was $150.00 for the 10 items becuse the invoice was not posted before the items were allocated to WO.

The book value is showing $125.00 for the 8 units on hand therefore the average for the remaining 8 units is $15.62

I am trying to undertand how the system works. I must be missing something because the average calculated is not clear. Please explain in detail... if possible.........Thanks

Title: Re: Unit Cost
Post by GasGiant on 11/24/08 at 13:07:55

When the 10 items went into stock the cost was $125 and $12.50 each

Two items came out at $12.50 each, leaving a Book Value of $100 for the remaining 8 items

Cost was adjusted (cost went up from $125 to $150), adding $25 to the Book Value, but with only 8 items left across which to spread the extra $25, sort of like adding $3.125 (1/8 of $25) to each of the 8 items left in stock, instead of $2.50 (1/10 of $25) to each of 10 items.

Since the system cannot add cost to a prior transaction (the issuing of the two items at $12.50), the extra cost can only be applied to the remaining items and the value of inventory. The books balance even though the costs of individual items seems odd.

Title: Re: Unit Cost
Post by Irma on 11/24/08 at 14:55:02

Thank you for the detail........I appreciate your help