Inventory Item Unit Cost Calculation

Inventory Costing Hierarchy

The following costing hierarchy is now employed to determine the unit cost of inventory items in the Inventory Item Record, Purchase Order, Client Order, Work Order Inventory Tab, Shop Order, Inventory Receipt Journal, Inventory Adjustments Journal, Inventory Journal, and the Job Journal. In Quotemaster, the enhanced average cost calculations are used, but not the costing hierarchy.

If the preferred computation (#1) is not available (for example, the item does not exist at the specified location), the system will try the second, then the third, and so on. The unit cost computation will depend on whether the Inventory Item is flagged as used Average, Last or Standard. Since the Standard Cost is used if the system cannot locate a more recent / precise cost, it is very important for this field to be completed in the Inventory Item record.

Note: ‘constrained by Where’ indicates that the Inventory History query may be conditioned by inventory location, serial number, and/or effective date.

Inventory Items Flagged as Average Cost:

1. Average from Inventory History (constrained by Where)

2. Average from Inventory History (not constrained by Where)

3. Standard from Inventory Item [unless the RevenueFromStandardCost registry option is enabled]

4. Last from Inventory History (constrained by Where)

5. Last from the Inventory Item

Note: The software now excludes AP Journal edits to items bought to wo's / jobs from the average cost calculation.

Average Cost after AP Vouchering: In certain cases, receiving a quantity of an item at one price, and then vouchering it at a much lower price produced an adjustment (quantity * price adjustment). This could leave the quantity on hand with a negative value if the quantity on hand was reduced before the AP transaction was entered. In this release, the Cost on Hand is prevented from going negative.

Inventory Items Flagged as Last Cost:

1. Last from Inventory History (constrained by Where)

2. Standard from Inventory Item [unless the RevenueFromStandardCost registry option is enabled]

3. Last from Inventory Item

Inventory Items Flagged as Standard Cost:

1. Standard from Inventory Item

2. Last from Inventory History (constrained by Where)

3. Last from Inventory Item