Material issue - Unit cost taking not average cost.

Dynamics 365 Business Central/NAV User Forum
#1

HI friends,

I am working on Nav 4.0 SP3

INventory costing manual 4.0 , Chapter - III , Page - 17 according to this chapter the below statement :

when it comes Navision costing manual it tells when u sold or issue the material firast it will take the Averae cost for Cost amount , then when u run the Batch job then it will adjust the costs actual.

For FIFO , Average , Standard, specific - it will take Average cost

My setups are .

Ne w item = Cost FIFO , costing method = FIFO

Inventory setup :

Automatic cost adjustmnet = No

Automatic cost posting = Yes

Expected cost posting = No

i purchased the item Cost FIFO with different dates and different rates ( 3 transactions)

Receipt & Invoice concept

Item ledger entry :

Posting date Item Name qty Cost amount ( actutal

01/01/01 Cost FIFO 1 1000

02/01/01 Cost FIFO 1 2000

03/01/01 Cost FIFO 1 3000

so In item card Unit cost field has the value = 1000 ( even i post 3 the transactions )

Now it comes to sale :

Ship & invoiced concept.

Item ledger entry Transactions :

Posting date Item Name qty cost amount Sales Amout

020202 Cost FIFO 1 1000 2000

030303 Cost FIFO 1 1000 3000

So system has taken the Unit cost vallue when i sell the item s on 02/02/02.

My doubt is which cost will take the system at first when u do sale/ issue/ consumption ?

is it average or Unitcost in Item card .

I done the same transactions for another new item with costing method = Average.

For this item also it is taking the Unit cost only.

Please clarify about this doubt.

My doubt is which cost will take the system at first when u do sale/ issue/ consumption ?

is it average or Unitcost in Item card .

#2

For SalesOrder, current Unit Cost from Item Card will be taken.(and never updated in SO Line again - so Document Lines contain approximate costing info only)

That for Adjust Cost-Item Entries (together with Post Inv.cost to G/L) exist, to adjust costs to their REAL values, but changes reflect in ILE+Value Entries and G/L accounts - SO lines forever contain unadjusted costing data.

You may run ACIE repeatedly for the same period - if new data is avialable (e.g. some ItemCharges posted afterwards or whatsoever), costing data in ILE will be adjusted to reflect adiitional data.

#3

Thanks ,

First thing is I know how the Adjust Item cost batch job will adjust the values .

But my question is which cost it is taking Is it Average cost or Unitcost ?

According your answer it is taking the Unit cost from Item card .

So Microsft Inventory costing manual is totally wrong when it comes to this point regarding which cost it will take ?

Manual says it is taking the Aveage cost .

According to your answer it is taking the Unit cost .

What u say on this .

#4

Arguable the unit cost is the average cost, but affected by timing differences.

I would not say the manual is “totally” wrong, but it is a matter of opinion.

I understand that the unit cost is alawys taken, and the true average cost is only seen after the adjust cost item routine is run, but before that you have a temporary average cost reflected in the unit cost.

#5

ADam wrote :

Arguable the unit cost is the average cost, but affected by timing differences

Yes . that is true.

Adam wrote :

I understand that the unit cost is alawys taken

Yes , that is true.
[

Adam wrote

I would not say the manual is “totally” wrong, but it is a matter of opinion.

that means about that statement what it has in the page 17 of chapter III.

that means is it correct what he has written …
do u agree ?

Adam wrote :
but before that you have a temporary average cost reflected in the unit cost.

what is meant by temporary average cost.

Avearage cost & Unit cost seems to be same .
but both values has minor difference like Average cost = 123.91634
Unit cost = 123.92.

even u run the batch job both values never be same , it has minor difference.

#6

The statement says that the average cost is used, the unit cost is the average cost, it will eventually catch up, and therefore I do not believe the statement is “Totally Wrong”. The true average cost cannot be taken because of possible later time based fluctuations, and therefore the best average is taken as the unit cost and updated with the true average later.

The unit cost changes, it is in essence the average cost, but it is not a truly accurate average cost and therefore I have refeffed to it as temporary. Those two costs are actually the same, it is a rounding you are talking about there, not a costing difference.