Need to find out how Epicor determines the material costs for a Quantity Adjustments. My assumption was that it took the last cost posted, but we have looked at several inventory items where the last cost is $330, but the next day a ADJ-QTY is done and the cost is listed as $114 not the $330 that it should be. Need help on this for audit purposes. Oh this is for a Finished Good item. Would really appreciate the help!
Thank you!
It depends on your Cost Method for the Part. What is the Cost Method for the Part? Standard, Average, FIFO, etc?
What is your costing model for the part?
The most popular costing methods:
Standard: - the unit cost will be whatever the standard cost was AT THE TIME of the adjustment
Average: - the unit cost of the adjustment will be whatever the AVERAGE cost was at the time of the adjustment.
LOT Average: The unit cost will be the Lot’s Average unit cost at the time of the adjustment
Fifo: - It will use the cost for the fifo layer that was active at the time of the adjustment.
“At the time of the adjustment” is the key word here… if you change the cost after a quantity adjustment, it will not affect the cost of the adjustment.
We are on Average Costing Method
Tim,
That’s what I thought would be the case. But for several of our inventory items that isn’t the case. Like I stated in my example the avg cost for the previous item is $330 which is the last transaction before the QTY-ADJ and the cost the QTY-ADJ shows is $114…which clearly isn’t the avg cost since the previous avg cost was $330.
Then the system will use the current average cost for the part at the time the qty adj was made.
make sure that people are not back dating the transactions… I have seen a few cases where the DATES make you think that things happened in a certain order, but if you examine the System date (in PartTran) you find out that someone played with the dates.
For inventory Issues to WIP, Customer Shipments, and Adjustments (In or OUT) the average cost as stored in the PartCost table is used for the transaction AS OF THAT MOMENT IN TIME. of course, the average cost can change a moment later if someone does a receipt.
There are only two ways that Average cost changes:
Qty 10 at $1
Receive Qty 10 at $2
Now you have 20 at 1.5
Qty 10 at $1
receive qty 30 at $3 each
Now you have 40 at $2.5 each
Also, if you have zero (or less) at the time of receipt, the new average is simply the new cost (no averaging is done).
Tim Thank you very much that is helpful! So I have a follow up question…when you are looking at the Average Costing What Transaction Types affect the Average Costing? ie. MFG-STK are there any others that would?
I believe it is nearly any transactions that go TO stock. PO Receipts to Stock, MFG to Stock, Transfer receipts to stock, etc.
Not sure about RMAs…
Oh Wow…okay…what about STK-CUS?
STK-CUS should NOT change the current average unit cost. It USES the current average unit cost to define what the COGS would be.
That’s what I was thinking, but wanted to make sure.
Thank you for you help.
RMAs do. We found that if you receive an RMA from Inspection Processing, the value displayed is used when calculating AVG. (Customer Material was set to zero but that was messing up the AVG.
Mark W.
What MFG-VAR? it looks like that does…
MFG-VAR - if you have late arriving costs to a job (ie… after the Manufactured parts are received), then the value of the extra costs may be posted to the cost of the items in stock (as long as they are still there). Late arriving costs happen when you issue material or charge labor after you receive the finished product.