Title: Re: Inventory Costs
Post by Laura Oliver on 03/14/17 at 08:46:13
Definitions / comments for future reference ....understanding and keeping costs straight in my mind.
LAST COSTS
Lynn_Pantic wrote:| The Last cost is the unit cost of the last transaction that added to on hand inventory which is typically a PO Receipt or Work Order receipt but could be adjustment or reversal of a transaction type that normally pulls from on-hand. . |
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Lynn_Pantic wrote:| Last Cost is a reference only and is the cost associated with the last transaction adding to stock, from any source including the reversal of a transaction that would normally consume stock. . |
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Lynn_Pantic wrote:| Last cost is the Last time a part was received to stock from any source so it could be a PO or WO receipt, an adjustment, or a reversal of something that would normally take it out of stock. |
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AVERAGE COSTS
Lynn_Pantic wrote:| Average Cost is the weighted average of existing on-hand stock. New Average Cost is calculated when items are put into stock by averaging with what is there. If there is 0 on hand, a new average will begin. Transactions coming out of stock (including COGS of shipments take place at Average Cost. . |
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Lynn_Pantic wrote:| Average is the average of on-hand stock and is recalculated when items are received in as a weighted average of current stock at old average cost and the new receipt at its cost. When on-hand goes to 0, the next receipt begins a new average unaffected by prior history. |
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Lynn_Pantic wrote:| …When a new item is entered, by definition the UOH and Average and Last cost are 0 and will be updated the first time the item is transacted. Base price is what you want to sell it for and Standard cost (if a purchased item) is what you manually select it to be. |
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STANDARD COSTS
Lynn_Pantic wrote:| Standard cost is the value that you give it for purchased parts and does not change unless you deliberately change it in IN-B, IN-L-A or IN-L-E. Assemblies and Finished goods get their standard cost from a rollup of the BOM component and routing standards in IN-B, IN-L-A or BM-G. |
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Lynn_Pantic wrote:| Standard Cost is a benchmark and never changes until you deliberately change it. Standard Cost for purchased items is entered and then the standard cost of assemblies is rolled up based on the bill of materials, purchased component standard cost and, if applicable, labor and overhead based on time standards on routings and work center rates. . |
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Lynn_Pantic wrote:| ….Standard costs are only updated when you want to update them, not every PO receipt. Most people only update standards once or twice a year. |
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Lynn_Pantic wrote:| …Standard cost (if a purchased item) is what you manually select it to be. |
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Lynn_Pantic wrote:| Standard Cost is not changed by UT-K-F. It is used by UT-K-F and copied to the Average and Last Cost fields. |
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Lynn_Pantic wrote:| ….Standard is a benchmark and should be updated as frequently as you deem necessary. Some people update standards quarterly, some annually. It depends what you use it for. |
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David Waldmann wrote:| If you are set up to use Standard Costs, then the PO will be received AT standard cost (as manually entered) regardless what you pay for the items. If you are using Average, LIFO or FIFO, then Standard Cost is just a reference. I believe the only thing it's actually used for in DBA/Evo is in the Estimating module (and there CAN be separate costs entered to be used only in Estimates). |
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shadowcaster wrote:Standard cost is the sum of all costs for that item.
Depending on item type, the cost will be dependent on the sum of the costs associated with that item type.
A type R item is cost plus freight
A type A item is the cost of the bom components plus routing cost ect.
What I usually find is if we make it it costs too much ! |
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