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Updating unit costs and cost amount (actual)

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Posted on by Eva

Hi!

Is there anyone who is sharp on item costs and the update of these and can help me out? We have some issues with this in our client's environment, where the cost is not updated on articles with a structure (assembly and production). On a regular purchase item, however, it is updated correctly when we run the job "adjust cost item transfer". How can we update unit costs with "adjust cost item transfer"?

Although the purchase order is posted with a fairly high price, this does not affect the cost (cost amount (Actual)) of "parent items".

Also, when changing status on a production order and from there updating the unit cost, does that apply to all valuation principles except standard? How can we ensure that the numbers for cost amount (actual) are correct? Is there any best practice for how this should be configured?

I don't know if the issue is that we are missing a configuration or understanding of what / how unit costs should be updated?

(purchase items = FIFO, production and assembly items = Standard)

Best regards,
Eva

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MahGah 15,613 on at

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Hi

Just want to check on a few things

1) Do you have "Adjust Cost - Item Entries" setup in Job Queue to run overnight or weekly?

2) What are your setup in inventory setup?
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Dallefeld 235 User Group Leader on at

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Especially for production orders and even more so if you have an subcontractor POs associated to production orders, cost don't get completely finished until the production order is finished and the subcontract PO is invoiced.

Take for example a basic production order (without subcontract), you can output, output, output and then post consumption with a backward flush when you finish the production order. So during the time that you have done the outputs into inventory you have an expected cost equal to the item card cost and for you that's a standard cost. Once you have consumed either manually or otherwise, the system now knows the cost of the layer(s) of output based on the current FIFO for the components and can adjust your material usage.

Again, as MahGah alluded to running Adjust Cost -Item Entries through a job queue daily would be best. You did not mention stockkeeping units but that is a consideration related to costing.
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Andri Wianto 406 on at

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Hi @Eva,

When an item uses Standard Cost, the actual purchase price does NOT automatically change the unit cost of the parent item.
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Guy-JM 129 on at

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When and where are you seeing the wrong cost?

When you create the production order it simply uses the unit cost of that item which, for FIFO items, is just the weighted average of existing inventory so may precede the receipt of your newer high valued PO.

Once your PO is invoiced and costs are updated of the component, if you recalculate production costs, they will use the new (presumably higher) unit cost of the component.

However, it is still a weighted average and not necessarily the same as the PO costs.

Only when you finish the production order and costs are applied will you have the true cost of production. Assuming costs have applied correctly. If this is critical data, you should really be using lot tracking to ensure accurate cost application.