Hello, I have a client that has an item with average costing. When the item card was set up they put in a unit cost of $6. Now about a month later, they realized that the actual unit cost of the item is $5.044
I want to Change the unit cost field but I can’t because it has item ledgers entries posted. This is what I have done.
Ran the ‘adjust item cost’ batch job.
Went into a Revaluation journal and selected the item, I put in the new unit cost (revalued), and posted it, so that my inventory is revalued at the new price.
But I still want to change the unit cost on the item card to $5.044, can this be done ?
You don’t need to worry about what Unit Cost is shown on Item Card - it is always updated, when you post a new PO/PI containing Item in question, and this value is used for expected cost calc ONLY. You can change it at any time on Card, but there is no need for it, as actual COGS, especially if Average is used, is calculated when you run ACIE.
The same with Reval.Journal - you use it, if you need to override system calculated cost for some reason, say, you have Item(s) which market value have changed (usually dropped down) after you purchased them, and you wish to reflect Inventory at it’s REAL value, writing off the difference to some Reval Account in GL.
This is the situation. The client of mine produces liquor. So they don’t actually purchase inventory at all, they make their liquor, and after about a month or so, they decid what the true cost is. But they sell a bunch of liquor before a true item cost is decided.
For instance, they will sell it for $25 and plug the unit cost with $6. After about 2 months of making sales, they find out the true cost should be $5.07 instead of $6. But you can’t just change the unit cost because transactions have been posted.
So I am assuming the reval journal is the way to go to revalue the inventory at $5.07 correct ?
And then run the ‘adjust item cost’ batch job.
Now the inventory of valued correctly and the item card is upadated.
This to me seems like the correct way, what do you think ?
Rather unusual situation… With such scenario, when cost is not a sum of “raw materials” purchased plus other direct/indirect expenses, all traceable in Navision, but it’s somehow “decided” by someone, first idea that came up to my mind was unusual, too.
You might leave Cost=ZERO for the product - liquor in your case - and book sales as if you have had 100% profit. Then, later when the cost is “decided”, do a simple posting in GL Journal, debiting Revenue Acc and crediting Expenses Acc by amount of “decided” cost… This still should be thought about in detail and acurately, I suppose different “lots” of product have different cost, if you need to trace COGS by every lot, Dims might be involved…
It’s a quick idea of course, but you may think in this direction, too…
So you’ll revaluate only Items (products) still in Inventory ONLY - those already sold aren’t affected in any way.
Right about Inventory, but, regarding Cost on ItemCard I already wrote in my first answer - Cost (as well as other Amts) are descriptive, estimate, call as you like it, as Inventory value is calculated from Item Ledger Entries + corresponding Value entries, doesn’t matter, what figures are in ItemCard, these are absolutely irrelevant for both Inv.valuation and COGS calculation.
in the revalutation journal is a field called “Applies-to Entry”. Try this:
Type in the “Item No.” and then type in the Item Ledger Entry No. you want to revaluate. Now enter the new unit cost and run adjust entries. I’m not totally sure if this works with items of type average but I think it should. Maybe try it with one item with only a few item ledger entries on a cronus database, if it really works then you should of course create a batch job to create the item journal lines for you.
Calc Inventory Value, select one item (for all locations), on the options tab I have selected Item, by location, by variant. click OK.
I tried to select ‘item ledger entry’ but it comes back with "you must not revalue items with costing method average, if calculate per is item ledger entry.’
So I brought in 4 lines (1 item, 4 locations), i tried drilling down in the ‘Applies to Entry’ filed to apply it against the original entry, but it comes back with ‘you must not enter applies to entry in a revaluation sum line’.
You have to manually insert the revaluation lines; insert a new line, enter the item no. and directly afterwoods enter the item ledger entry no. in the field “Applies-to Entry”, this must work.
Now that i know how to do a reval journal manually, this will help (i had never done one manually before).
Another question, when i enter a line in manually, and drill down in the ‘Applies to Entry’ field, it only shows me all of my positive adjustments. This is good, so I can revalue my positive transactions from 6.00 unit cost to 5.07. But why don’t any of my sales show up in here? (negative adjustments). I want to revalue all of the sales too at $5.07 unit cost.
Thats because the Report “Adjust Cost - Item Entries” will take care of negative adjustments. If you revaluate all pos. adjustments the “Adjust Cost - Item Entries” will revaluate the neg. adjustments automatically.