Quick but Newbie Cost Method Question

Thanks, this explains it very well.

Sent from my iPhone

On Jun 16, 2010, at 10:30 PM, "CharlieSmith" <CSmith@...> wrote:

Simply put Average costing takes the cost of the current inventory and
the cost of the new inventory receipt and does a weighted average.

((Prev. Quantity x Prev.Unit Cost) + (Quantity Received x Receipt Unit
Cost)) / New Quantity On Hand

Example: You have 100 units of part ABC in stock, at an average cost of
$2.00. You receive 50 units at a cost of $3.50. The new average unit
cost stored in the part master file is $2.50 ((100 x 2.00) + (50 x
3.50))/150.

Charlie Smith

Smith Business Services / 2W Technologies LLC

www.vistaconsultant.com <http://www.vistaconsultant.com/> /
www.2WTech.com

From: vantage@yahoogroups.com [mailto:vantage@yahoogroups.com] On Behalf
Of bturner101@...
Sent: Wednesday, June 16, 2010 4:55 PM
To: vantage@yahoogroups.com
Subject: [Vantage] Quick but Newbie Cost Method Question

I just wanted to verify if my average costing method logic for Vantage
8.03.409 is correct.

Does Vantage take a weighted average of ALL part receipts, job and/or
PO, to determine a part cost?

I informed my boss this is what average costing in Vantage does and he
couldn't believe that the system uses ALL receipts to average a part
cost.

Any verification or corrections is greatly appreciated.

[Non-text portions of this message have been removed]




[Non-text portions of this message have been removed]
I just wanted to verify if my average costing method logic for Vantage 8.03.409 is correct.

Does Vantage take a weighted average of ALL part receipts, job and/or PO, to determine a part cost?

I informed my boss this is what average costing in Vantage does and he couldn't believe that the system uses ALL receipts to average a part cost.

Any verification or corrections is greatly appreciated.
From our tests and review with our consultant, there are various trigger required to be put in place for average cost to work decently.

FIrst and foremost, are you using MES live?
If so are employees filing all required fields properly when closing ending an activity.

The allocation of costs for a given operation in average mode, is base on actual costs for a given operation divided by number of completed quantity at this operation. (Completed qty is the reported qty from an employee in MES when closing the activity, not all qty may yet be completed, some operations can lasts for a certain periode of time). Vantage repeats this calculation for every operation.

Same applies to material, Actual material pulled against required is used to allocate a portion of the material costs to the qty reported to inventory.

So if for a given Work Order you have several transaction to stock, you might get various average cost used in part tran for each individual transaction.

Hope this helps,

I find the average calculation used in vantage a little bizarre, I much prefer transaction reported to inventory based on Estimated unit costs. They are by far much simpler to track down, as amounts used to report qties to inventory are based on the estimated unit costs of the Work Order. This is simple and efficient. Key here is to then monitor variances to estimate on a timely manner and investigate if variance are due to incorrect BOMs and Routing, or efficency production on the floor. Wish they will go this way On Epicor 9.

BTW we are using std costs, as we did not like the average cost behavior of vantage, requiring a lot of discipline from shop floor employees to proprely reports qty completed and so on.

Hopes this helps explain you boss. I have a documents explaining the various steps of average costing of Vantage, but it has been prepared in french....

Sincerely,

Ben



--- In vantage@yahoogroups.com, "bturner101@..." <bturner101@...> wrote:
>
> I just wanted to verify if my average costing method logic for Vantage 8.03.409 is correct.
>
> Does Vantage take a weighted average of ALL part receipts, job and/or PO, to determine a part cost?
>
> I informed my boss this is what average costing in Vantage does and he couldn't believe that the system uses ALL receipts to average a part cost.
>
> Any verification or corrections is greatly appreciated.
>
Simply put Average costing takes the cost of the current inventory and
the cost of the new inventory receipt and does a weighted average.

((Prev. Quantity x Prev.Unit Cost) + (Quantity Received x Receipt Unit
Cost)) / New Quantity On Hand



Example: You have 100 units of part ABC in stock, at an average cost of
$2.00. You receive 50 units at a cost of $3.50. The new average unit
cost stored in the part master file is $2.50 ((100 x 2.00) + (50 x
3.50))/150.





Charlie Smith

Smith Business Services / 2W Technologies LLC

www.vistaconsultant.com <http://www.vistaconsultant.com/> /
www.2WTech.com







From: vantage@yahoogroups.com [mailto:vantage@yahoogroups.com] On Behalf
Of bturner101@...
Sent: Wednesday, June 16, 2010 4:55 PM
To: vantage@yahoogroups.com
Subject: [Vantage] Quick but Newbie Cost Method Question





I just wanted to verify if my average costing method logic for Vantage
8.03.409 is correct.

Does Vantage take a weighted average of ALL part receipts, job and/or
PO, to determine a part cost?

I informed my boss this is what average costing in Vantage does and he
couldn't believe that the system uses ALL receipts to average a part
cost.

Any verification or corrections is greatly appreciated.





[Non-text portions of this message have been removed]
Ben is right, in that it takes a lot of discipline to successfully
manage Vantage's version of average costing. We have a lot of controls
in place concerning receipt of jobs to stock because of all the things
he mentioned like timely claiming of operations, ensuring that all the
materials for the job were issued at the proper quantities etc..



Rob Bucek

Manufacturing Engineer

PH: (715) 284-5376 ext 3111

Mobile: (715)896-0590

FAX: (715)284-4084

<http://www.dsmfg.com/>

(Click the logo to view our site) <http://www.dsmfg.com/>





From: vantage@yahoogroups.com [mailto:vantage@yahoogroups.com] On Behalf
Of CharlieSmith
Sent: Wednesday, June 16, 2010 10:31 PM
To: vantage@yahoogroups.com
Subject: RE: [Vantage] Quick but Newbie Cost Method Question





Simply put Average costing takes the cost of the current inventory and
the cost of the new inventory receipt and does a weighted average.

((Prev. Quantity x Prev.Unit Cost) + (Quantity Received x Receipt Unit
Cost)) / New Quantity On Hand

Example: You have 100 units of part ABC in stock, at an average cost of
$2.00. You receive 50 units at a cost of $3.50. The new average unit
cost stored in the part master file is $2.50 ((100 x 2.00) + (50 x
3.50))/150.

Charlie Smith

Smith Business Services / 2W Technologies LLC

www.vistaconsultant.com <http://www.vistaconsultant.com/> /
www.2WTech.com

From: vantage@yahoogroups.com <mailto:vantage%40yahoogroups.com>
[mailto:vantage@yahoogroups.com <mailto:vantage%40yahoogroups.com> ] On
Behalf
Of bturner101@... <mailto:bturner101%40sbcglobal.net>
Sent: Wednesday, June 16, 2010 4:55 PM
To: vantage@yahoogroups.com <mailto:vantage%40yahoogroups.com>
Subject: [Vantage] Quick but Newbie Cost Method Question

I just wanted to verify if my average costing method logic for Vantage
8.03.409 is correct.

Does Vantage take a weighted average of ALL part receipts, job and/or
PO, to determine a part cost?

I informed my boss this is what average costing in Vantage does and he
couldn't believe that the system uses ALL receipts to average a part
cost.

Any verification or corrections is greatly appreciated.

[Non-text portions of this message have been removed]





[Non-text portions of this message have been removed]