difference between Average cost and Unit cost

Business Central/NAV User Forum
1

Hi,

I am working on Nav 4. 0 sp3.

I could find any difference between Average cost and Unit cost .

So I am throwing some queries to understand about the exact difference.

I gone through the Help for the Fields Average cost and Unit cost.

Average cost = The program calculates the average cost on the basis of the Cost Amount (Actual) field plus the Cost Amount (Expected) in the Value Entry table. The amount in this field is then divided by the sum of the quantities in the Item Ledger Entry Quantity field.

Unit cost : If you selected a costing method other than Standard, the program uses the following calculation for the unit cost:

Unit Cost = Inventory Value of items on hand (expected cost + invoiced cost) / Quantity on Hand

Both fields contain the same meaning .

Then what is the difference.

2

The HELP texts are difernet for my implementation of V4 SP3. Here they are and I have underlned the important sentence - did you see that?

Unit Cost Field

The Item Table

This field contains the cost per unit of this item.

The program fills in the unit cost field according to what you selected in the Costing Method field:

  • If you selected Standard as the costing method, the program fills the Unit Cost field with the value from the Standard Cost field.

  • If you selected a costing method other than Standard, the program uses the following calculation for the unit cost:

Unit Cost = Inventory Value of items on hand (expected cost + invoiced cost) / Quantity on Hand

The Unit Cost field is also updated according to the costing method of the item:

  • If the costing method is Standard, the program updates the unit cost when you change the value in the Standard Cost field.

  • If you selected FIFO, LIFO, Specific or Average, the program updates the field when you run the Adjust Cost-Item Entries batch job.

With the costing methods other than Standard, the program will also update this field during the posting of purchase invoices if one of the following conditions is true:

  • The net invoiced quantity of the item changes from negative or zero to positive.

  • The unit cost on the item card is zero.

If one of these conditions is true, the program will update the field with the value in the Last Direct Cost field for the item.

Average Cost (LCY)

This field contains the current average cost of this item in local currency.

The program automatically updates the average cost every time you post an invoice or an inventory increase or decrease. It also updates the field when you run the Adjust Cost - Item Entries batch job.

The program calculates the average cost on the basis of the Cost Amount (Actual) field plus the Cost Amount (Expected) in the Value Entry table. The amount in this field is then divided by the sum of the quantities in the Item Ledger Entry Quantity field.

The data in these fields is used differently depending upon the Costing Method which has a long and involved description.