average cost and adjust cost - Item entries

Dear All,

In Nav 3.1, inventory setup, there is an option ‘Average cost calc. type’ with two options ‘Item & Location & Variant’ and ‘Item’. What is difference between the two? I mean how the results would change and where it would change?

In inventory module , periodic activities, there is a processing report ‘adjust cost- item entries’, what does this report do?

Please i need explanation

Thanks

The first one will calculate and hold the average cost for each location the item is used in.
The second updates the true costs of the items from the purchase invoices of your inventory and cost of goods sold and is absolutely critical to the costing nature of the system.