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Cost recalculation

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I have a somewhat complicated case.

As a manufacturer, I calculate the manufacturing costs for each batch and the value of the finished goods at the end of each period.

I create purchase orders for a raw material (oil) on a daily basis and enter its approximate price because the price is not determined until the first day of the next month, (When the price is determined, it becomes a unified price for the entire month).

When the price is determined, I need a way to recalculate the costs of manufacturing materials during the previous month and to recalculate the remaining goods on hand at the end of the month without manually adjusting the prices in purchase orders.

What is important to me is to recalculate the manufacturing costs and recalculate the value of the finished goods for the last period.

As for the issue of updating prices within purchase orders to the new price, it makes no difference whether it is done or not.

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André Arnaud de Cal... 299,947 Super User 2025 Season 2 on at

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Cost recalculation

Hi,

Can you tell us what inventory costing method you are using for both the raw material and finished goods? Is it e.g. fixed price, average, FIFO? At what exact moment do you get the vendor invoices for the raw material? Do you post invoices that later need some correction invoices?

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BillurSamdancioglu 19,280 Most Valuable Professional on at

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Cost recalculation

As Andre mentiioned, that depends on which method you selected on your item. If you selected as average you may update the cost by to use the inventory calculation or revaluatiion.

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Community member 13 on at

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Cost recalculation

Hi Andre & Billur,

The inventory costing method is the weighted average for the raw materials and the finished goods.
I receive the invoice on the first day of the next month for all the related purchases during the month.
It is just one invoice for all the receipts.

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André Arnaud de Cal... 299,947 Super User 2025 Season 2 on at

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Cost recalculation

Hi,

Thanks for your replies. As you are using weighted average and the invoice will be only posted once you know the exact price, the costs of the finished goods will be recalculated when you run the inventory closing or recalculation. This will adjust the costs at inventory. If you end the production order after the recalculation, the production cost might be correct.

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Mohamed.Ali.Sayed228 39 on at

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Cost recalculation

For this business scenario I think it's best for you to make one purchase order for the entire month and then make several receipts and one invoice for all the receipts with the correct purchase price of the following month so it can be easy for you.

In this case you have to use the Weighted average inventory item model group for both the RM and the FG.

After the recalculation of this month, The final cost for the FG is populated thus the profit margin for the selling process.

FG: Finished Good

RM: Raw Material

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