Hi Lydia,
I agree with your statement regarding standard costs but I'm skeptical about
the one regarding average costs. My understanding of the average cost
calculation in Vantage is that it is a weighted average. For example, say
you start with 10 units in stock with an average cost of $1.20, giving you a
total value of $12.00. Then, if you receive 2 new units with a cost of
$0.00, Vantage will calculate a new total value of $12.00 (12.00 + (2 *
0.00)) and a new average cost of $1.00 ($12.00/12 units). The end result is
no change in the total value of inventory of this part because Vantage
recalculates the average unit cost for the part. Of course, you would have
just created a variance from your standard cost, but that's the way standard
costs are supposed to work.
-----Original Message-----
From: Lydia Coffman [mailto:lcoffman@...]
Sent: Monday, August 21, 2000 4:55 PM
To: vantage@egroups.com
Subject: RE: [Vantage] Inventory costing
A word of caution (verified with our accountant): if you receive 2 parts
into inventory from manufacturing at $0, if that part has a cost already
associated with it(as in standard cost or average cost), your inventory
value will increase by the number of parts x the cost - even if the receipt
is at $0!!! So you are leaving your cost on the job, but your inventory
value still increases.
[Non-text portions of this message have been removed]
I agree with your statement regarding standard costs but I'm skeptical about
the one regarding average costs. My understanding of the average cost
calculation in Vantage is that it is a weighted average. For example, say
you start with 10 units in stock with an average cost of $1.20, giving you a
total value of $12.00. Then, if you receive 2 new units with a cost of
$0.00, Vantage will calculate a new total value of $12.00 (12.00 + (2 *
0.00)) and a new average cost of $1.00 ($12.00/12 units). The end result is
no change in the total value of inventory of this part because Vantage
recalculates the average unit cost for the part. Of course, you would have
just created a variance from your standard cost, but that's the way standard
costs are supposed to work.
-----Original Message-----
From: Lydia Coffman [mailto:lcoffman@...]
Sent: Monday, August 21, 2000 4:55 PM
To: vantage@egroups.com
Subject: RE: [Vantage] Inventory costing
A word of caution (verified with our accountant): if you receive 2 parts
into inventory from manufacturing at $0, if that part has a cost already
associated with it(as in standard cost or average cost), your inventory
value will increase by the number of parts x the cost - even if the receipt
is at $0!!! So you are leaving your cost on the job, but your inventory
value still increases.
[Non-text portions of this message have been removed]