Average Cost Calculation Method

Requirement : Navision calculates the average cost by day / by week / by Month. However one of our customer wishes to calculate the average cost by instance.

Setups :
Database : Nav 5.0 SP1
Inventory costing method : Average (for all items)
Inventory setup : Average cost calculation type : Item & location & variant

Scenario :

1st Jan 2011 - Purchase Ramaterial-Item B - 2 Liters @ 10 $ each :
Item B : Average cost / Liter = 10 $ as on 1st Jan 2011

2nd Jan 2011 - Purchase Ramaterial-Item B - 2 Liters @ 20 $ each
Item B: Average cost / Liter = 15 $ as on 2nd Jan

10th Jan 2011 - 10 Am - 1 Liter of Item B is consumed to produce 1 liter of item A (Finished goods) and the cost of consumption is 15 $ (Based on the average cost) and hence the output finished goods cost is 15 $

10th Jan 2011 - 3 pm - Purchase Ramaterial-Item B - 3 Liters @ 25 $ each
Item B: Average cost / Liter = 15 $ as on 10th Jan will be 20 $ after running the ‘Adjust cost routine’. Due to the setup (Average cost calculation type : Item & location & variant) the consumption cost of production which happened at 10 AM got adjusted to 20 $ (instead of 15 $) and the output cost again gets adjusted to 20 $

In the above scenario my customer wishes that the production consumption cost should still remain as 15 $ as the receipt was done only after the production consumption is done ie., instead of doing the average cost calculation by Day the average cost calculation should be done at that instance.

Is there any way to do this ? If anybody has customized kindly pass on some information to us.

besides technical possibilities

personally i think your customer should consult their accountant / CFO first… if such change may lead to a big varience in figures, that could threaten the consistency of their reports, in terms of accounting standard.

( if such change doesn’t lead to a major varience, then what’s the point ? )

I guess the point of time to evaluate cost is pretty much depends on how long the production period and what’s the industry standard.

Guess so.