Managing Inventory Costs

Configuration Process Costing Individual Items How Current Cost fields are updated in Deacom How Accounting Standard Cost fields are updated in Deacom How Future Cost fields are updated in Deacom Costs on Bills of Material Current cost from BOM and Routing rollups for sub assemblies and finished goods Managing Facility costs Determining lot cost Reviewing costs Updating inventory costs Changing inventory costs How other costs are maintained

Managing inventory costs in Deacom refers to the process of valuating, entering, updating, and reporting on the costs of materials, labor, and burden (machines and overhead) required to purchase, produce, and sell products.

The process includes choosing the "Inventory Costing" method in Accounting Options, adding and modifying costs on Item Master records (via Inventory > Item Master > Costs tab) and Routings, configuring Bills of Materials that define the items and costs used to produce finished goods, and using the Inventory > Cost Updates feature to modify existing costs, which allows customers to perform this task on multiple items simultaneously.

Selecting the appropriate inventory costing method for your organization depends upon your industry and how you run your business.  Prior to implementing Deacom, you may want to consult your CFO and/or outside CPA firm to determine which is best for your current and expected future situation. Regardless of the cost method chosen, individual product costs must be maintained for in Deacom.

Inventory costs in Deacom involve both the costing of individual items, such as raw materials and finished goods, as well as the cost of each inventory lot. Lots in inventory represent the defined quantity of an item used as a unit of inventory as a result of receiving or production. Lots are also used to identify product shipped to a customer.

This page discusses the process involved with costing individual items first, followed by information on how lot costs are calculated in Deacom, and finally, the tools available to update inventory costs in the system.

Configuration

• Inventory Costing Method - The inventory costing method is defined via the "Inventory Costing" field in the Costing tab of Accounting Options. Deacom provides three different inventory costing methods for postings, described below. Additional details are available via Sample Accounting Postings.
  • Standard Cost: Each lot of material is added to inventory at standard cost and variances are generated for purchasing differences from standard. Each lot retains its lot value until it is relieved from inventory.
  • FIFO (Actual) Cost: Each lot of material is added to inventory at actual cost and retains its lot value until it is relieved from inventory.
  • Average Cost: Each lot of material is added to inventory at actual cost and all lots present are revalued at the new average cost. The posting behavior from a general ledger perspective when running in average cost is the same as when running in actual. The differences between the two methods are reflected in how inventory costs are calculated as described in the above list.
• Item Masters - Item Master records will need to be created in the system via Inventory > Item Master. For more information, refer to the Designing a Part Numbering System and Creating Parts page.
• Bills of Materials - Required if producing items. A Bill of Materials (or BOM) is a list of the parts or components and quantities of each needed to produce an end product or finished good. The parts required may include raw materials, subassemblies, intermediate assemblies, or sub-components.
• Routings - Not required, but recommended. A Routing in the Deacom system is a series of pre-defined processing steps, listed in order of sequence, necessary to complete a product. Each routing step indicates the Work Center, the Operation that will be performed, and the processing rate for the item in units per hour. Each routing step has a cost per unit based on the standard operation labor rate, the Work Center’s hourly cost, and the processing rate. The sum of all the routing step costs is the total labor cost per piece, which is stored in the Item Master "Current Labor" field in the Costs tab, but can be manually changed. Note: If using Routings in Deacom, Bills of Materials are required.

Process

Costing Individual Items

The item master record in Deacom contains a costing tab with three set of costing fields, one for current costs, accounting standard costs, and future costs. The below explains how these fields are used in Deacom.

• Current Costs - Represented by the "Current Materials" through "Current Total" fields on the Item Master Costs tab, these are dynamic values with the potential to roll up from supporting data in BOMs and Routings. As the source field for updating the Accounting Standard costs, these fields should only be updated to contain valid potential standards. These fields should never be used as an area to experiment with costs.
• Accounting Standard Costs - Represented by the "Acct. Materials" through "Acct. Std. Total" fields on the Item Master Costs tab, these are static values that will post to the general ledger in either Standard Cost mode or when posting standard labor and burden in Actual Cost mode. These fields are updated as a result of the values being "pushed" from the current cost fields on the item master record. Because of that, these fields are secured and should only be updated by trained personnel following established company procedures.
• Future Costs - Represented by the "Future Materials" through the "Future Total" fields on the Item Master Costs tab, these are dynamic values with the potential to roll up from supporting data in BOMs and Routings. They are NOT a source for updating Accounting Standard costs, so these are a good playground for “what if” questions that would not be valid to put in the Current Cost fields.

How Current Cost fields are updated in Deacom

All costing in Deacom begins with entering or having values calculated for the current costs fields on each item master record. The table below details how current cost fields are updated and maintained in Deacom. Note: When entering current costs for Supplies, Raw Materials, and Components, the "Roll Up Material Costs From BOM," "Roll Up Labor Costs From Routing," and "Roll Up Burden Costs From Routing" fields on the item master properties tab must be unchecked to allow costs to be manually entered.

Field	Supplies	Raw Materials	Components	Sub  Assemblies	Finished Goods
Current Material	Manually entered	Manually entered	Manually entered	Roll up from BOM (preferred method) or manually entered. The roll up includes lower level labor.	Roll up from BOM (preferred method) or manually entered. The roll up includes lower level labor.
Current Labor	Manually entered and usually zero	Manually entered and usually zero	Manually entered and usually zero	Roll up from Routing  or manually entered. If rolling up, the labor cost is calculated as Routing Labor Cost + Routing Machine Cost.	Roll up from Routing or manually entered. If rolling up, the labor cost is calculated as Routing Labor Cost + Routing Machine Cost.
Current Burden	Manually entered and usually zero	Manually entered and usually zero	Manually entered and usually zero	Roll up from Routing or manually entered. If not rolling up, an equation can be entered in the "Std. Burden Calc." field on the item master calcs tab.	Roll up from Routing or manually entered. If not rolling up, an equation can be entered in the "Std. Burden Calc." field on the item master calcs tab
Current Material Burden	Manually entered or an equation can be entered in the "Mat. Burden Calc." field on the item master calcs tab.	Manually entered or an equation can be entered in the "Mat. Burden Calc." field on the item master calcs tab.	Manually entered or an equation can be entered in the "Mat. Burden Calc." field on the item master calcs tab.	Manually entered and usually zero unless purchased or an equation can be entered in the "Mat. Burden Calc." field on the item master calcs tab.	Manually entered and usually zero unless purchased or an equation can be entered in the "Mat. Burden Calc." field on the item master calcs tab.
Current Freight	Manually entered	Manually entered	Manually entered	Manually entered and usually zero unless purchased	Manually entered and usually zero unless purchased
Current Total	Calculated – sum of current material, current labor, current burden, current mat burd and current freight	Calculated – sum of current material, current labor, current burden, current mat burd and current freight	Calculated – sum of current material, current labor, current burden, current mat burd and current freight	Calculated – sum of current material, current labor, current burden, current mat burd and current freight	Calculated – sum of current material, current labor, current burden, current mat burd and current freight

Companies will periodically review and update current costs. If running in actual cost mode, these updates often occur quarterly. Updates to current costs for companies running in standard cost mode usually occur less frequently, such as once a year.

How Accounting Standard Cost fields are updated in Deacom

Accounting Standard Cost fields cannot be updated manually. They may only be updated on individual items via the "Update Acct. Std." button or on multiple items simultaneously via the Cost Updates transaction. Security exists to control access to both of these methods.

When updating Accounting Standard Cost fields, the system pushes the value in every Current Cost field on the item master to the corresponding Accounting Standard Cost field.

How Future Cost fields are updated in Deacom

Future costs in Deacom are manually entered or calculated. The table below details how current cost fields are updated and maintained in Deacom. Future costs are not used to determine inventory costs in Deacom and therefore are never posted to the General Ledger.

Field	Supplies	Raw Material	Components	Sub Assemblies	Finished Goods
Future Material	Manually entered	Manually entered	Manually entered	Roll up from BOM (preferred method) or manually entered	Roll up from BOM (preferred method) or manually entered
Future Labor	Manually entered and usually zero	Manually entered and usually zero	Manually entered and usually zero	Roll up from Routing  or manually entered	Roll up from Routing or manually entered
Future Burden	Manually entered and usually zero	Manually entered and usually zero	Manually entered and usually zero	Roll up from Routing or manually entered	Roll up from Routing or manually entered
Future Material Burden	Manually entered	Manually entered	Manually entered	Manually entered and usually zero unless purchased	Manually entered and usually zero unless purchased
Future Freight	Manually entered	Manually entered	Manually entered	Manually entered and usually zero unless purchased	Manually entered and usually zero unless purchased
Future Total	Calculated – sum of future material, future labor, future burden, future mat burden and future freight	Calculated – sum of future material, future labor, future burden, future mat burden and future freight	Calculated – sum of future material, future labor, future burden, future mat burden and future freight	Calculated – sum of future material, future labor, future burden, future mat burden and future freight	Calculated – sum of future material, future labor, future burden, future mat burden and future freight

Costs on Bills of Material

The cost, per stock unit, of items listed on the Bill Of Materials comes from the Current Total Field on the corresponding item master record. The the total cost, or extension, for each individual BOM line is calculated as the quantity specified multiplied by the cost per stock unit.

The "Unit Cost" on the BOM is the calculation of the total extension for all BOM lines divided by the batch yield. The unit cost on the active, default non-facility BOM flows to the Current Material Cost on the item master defined in the "Part Number" field on the General tab of the BOM if rolling up Material Costs from the BOM.

Current cost from BOM and Routing rollups for sub assemblies and finished goods

The process by which Deacom obtains and calculates the costs that comprise an item's current total cost is represented by the graphic below.

Notes

1. In some cases, users may have multiple options when determining how individual costs are entered in the system or if these costs will be rolled up to the item master record. Additional information on these options and the fields mentioned are presented in the Item Master Costs tab section.
2. Labor and Burden can be manually entered if desired.

What are the Routing cost calculations?

• Labor Cost ($/Stock Unit) = Operation's Labor Cost ($/man-hr) * Routing Sequence "Hours" (hr) * Routing Sequence "Crew Size" / Routing Sequence "Units" (unit).
• Labor Burden Cost ($/Stock Unit) = Operation's Burden Cost ($/man-hr) * Routing Sequence "Hours" (hr) * Routing Sequence "Crew Size" / Routing Sequence "Units" (unit).
• Machine Burden Cost ($/Stock Unit) = Work Center's Hourly Cost ($/hr) * Routing Sequence "Hours" (hr) / Routing Sequence "Units" (unit).

For the above, "Units" for a non-batch sequence are the units on the sequence itself; "Units" for a batch sequence are the units from the Routing header.

The total Routing cost is the sum of all the sequence costs that make up the Routing.

Managing Facility costs

Items in different Facilities can have different costs. Item Facility specific costs are managed via the Facilities tab on individual item master records. The process to enable Item Facility costs is detailed below.

1. Enter current costs on the "Costs" tab of the Facility record for the appropriate items.
2. Ensue the "Use Costs" box is checked on the "Costs" tab.
3. Optional. Check the "Require Facility Entry" on the item master to make entry of Facility records for items required.

Note: The system will only rollup costs to the current costs fields on the Item Facility record if Facility-specific BOMs with routings exist.

Determining lot cost

Lot costs are determined from a variety of factors, such as the type of transaction used to create a Lot, when the Lot was created, the "Inventory Costing" method selected in Accounting Options, and Item Master settings such as the Unit of Measure. Note that if the Part's Item Master contains a Facility record and the "Use Costs" flag is checked, then the values specified on the Facility Part Cross Reference's Costs tab will be used when performing the inventory function for the selected Facility. When using the Update Type of "Lot Costs" on the Cost Updates form, the system will update all lots, regardless of a negative quantity, as long as the lot does not have a date filled into fi_zeroed.

The formulas are described in equation format, together with considerations for how to establish costs for lots, using a table below.

Action	Inventory Costing Method	Regular Calculation	Calculation using Catch Weights (CW)
Receiving a Purchase Order	Actual (FIFO) or Average	Purchase Order Price / Stock Pricing Unit x Stock Unit *Standard freight defaults to the purchase order line from either the item master or Facility tab if the "Use Costs" box is checked but can be manually overridden.	Purchase Order Price x Actual CW Entered
	Standard	Acct Std Total of Item /Stock Pricing Unit x Stock Unit	Acct Std Total x Actual CW Entered
Inputting or Finishing Production	Actual (FIFO) or Average	Sum (Cost of Lots Issued / Backflushed + Labor + Burden) / Stock Pricing Factor x Stock Factor -No material variance – value of all lots relieved becomes the material cost of product -Inventory relief is critical --Finish all product, close job, relieve all inventory issued --Incrementally finish product, backflush the product’s BOM -Actual Labor is problematic – “Add standard labor and burden in actual cost mode” -Actual Burden is an oxymoron - “Add standard labor and burden in actual cost mode”	Sum (Cost of Lots Issued / Backflushed + Labor + Burden) / Stock Pricing Factor x # of CW Lots x Weighted Avg of the CW Lot*
	Standard	Acct Std Total / Stock Pricing Factor x Stock Factor	Acct Std Total / Stock Pricing Factor x # of CW Lots x Weighted Avg of the CW Lot*
Returning material	Actual (FIFO) or Average	(Last Cost) or (Acct Std Total if Last Cost is 0.00) / Stock Pricing Unit Factor x Stock Unit Factor -If the item master is marked to “Use prices as cost for credit memos” --Use the price from the credit memo as the lot cost -If there is a facility tab with the “Use Costs” box checked --Last Cost in that facility --If Last Cost is zero, then accounting standard cost in that facility -If no facility tab, or “Use Costs” is not checked --Item master last cost (entire enterprise) --If Last Cost is zero, then item master accounting standard cost -- If using the "Return Lots from Linked Sales Orders" option is Sales > Options, see the notes and considerations section below.	CW is not factored into the calculation when returning inventory
	Standard	Acct Std Total / Stock Pricing Unit Factor x Stock Unit Factor
Adjusting inventory in	Actual (FIFO) or Average	Unit Cost / Stock Pricing Factor x Stock Factor *The Unit Cost on the Adjustment form controls the cost of all lots adjusted into inventory.  The field defaults to: -If there is a facility tab with the “Use Costs” box checked --Last Cost in that facility --If Last Cost is zero, then accounting standard cost in that facility -If no facility tab, or “Use Costs” is not checked --Item master last cost (entire enterprise) --If Last Cost is zero, then item master accounting standard cost -Default value can be changed if user has “Inventory adjustments – view costs” security access	Unit Cost x Actual CW Entered
	Standard	Acct Std Total / Stock Pricing Factor x Stock Factor	Acct Std Total x Actual CW Entered
Using the Produce Assemblies function	Actual (FIFO) or Average	Determined by the Lot Costs of the consumed materials
	Standard	System evaluates the Standard Cost of the consumed material(s) and compares to the Standard Cost of the material(s) being produced

* Weighted Avg of the CW Lot = Actual CW for Lot / Total CW for all Lots Entered

Notes on lot costing when receiving Purchase Orders

In Average cost mode, the actual cost at the time of receipt is stored in "fi_cost" and the Average Cost continues to be stored in "fi_invcost". Actual Cost example: A part number, RAW1, has a Purchase Order price of 5.00 USD and is purchased by the each. The Stock Pricing Unit is a “Case”, with a factor of 12 each, and the Stock Unit is "Each". A Purchase Order for a quantity of 6.00 RAW1 is received. The lot cost will be 5.00/12.00 x 1.00 = .4167. The total value of lot will be 6.00 x .4167 = 2.50.

Notes on lot costing when inputting or finishing production

The cost of lots produced and placed in inventory is the summation of the materials, labor, and overhead used to create those lots. Note that the Accounting Options Costing tab contains a "Cost Expression" field. If this field contains a valid expression, the system will use the result of the expression to populate the production cost (lot cost) for material finished/produced on Jobs in Deacom. In this case, the calculations/logic specified in the table will not be used. The Accounting Options Labor / Burden tab also contains a "Use Standard Labor and Burden in Actual Cost Mode" flag. If this flag is marked as true, the Standard Labor and Standard Burden for the item finished will be posted to the "Job Labor Standard" and "Job Burden Standard" accounts (as defined in Accounting Options), while the Actual Cost of materials will be posted to the "Job Materials Standard" account, in Actual (FIFO) or Average cost modes. The value of the inventory lot posted will be the sum of Actual Materials, Standard Labor, and Standard Burden.

Notes on lot costing when returning material

The "Use Price as Cost on Credit Memo" flag on the Part's Item Master > Properties tab may be used to determine the lot cost when processing a Credit Memo (negative quantity Sales Order). If this flag is marked as true, the Lot Cost of the item will be the price specified on the Sales Order line when this item is processed on a Credit Memo in Average or Actual (FIFO) cost modes. If this flag is not checked, items will be returned to inventory based on the item's Last Cost, or if the Last Cost of the item is zero, the Accounting Standard Total of the item will be used.

Beginning in version 17.01.015, and when using Actual/FIFO costing in the system, if the "Return Lots from Linked Sales Orders" field is checked in Sales > Options, lots returned that were shipped on the linked sales order will be returned at the same lot cost as when they were shipped. Any lots returned that the user entered, and are not linked to an original lot shipped will use the current functionality which checks last cost and then standard cost.

Notes on lot costing when adjusting inventory in

When referencing Stock Factors, the Factor itself is defined on the Unit of Measure table. Note that the Unit Cost used in these formulas is specified on the Inventory Adjustment form. In Actual and Average cost modes, the default value for the Unit Cost comes from the "Last Cost" field on the Part's Item Master (unless, as mentioned above, there is a Facility selected on the Part's Item Master and it has the "Use Costs" flag checked). Also, if the "Last Cost" is zero, then the system will use the Accounting Standard Total. In Standard cost mode, the default value for the Unit Cost comes from the Accounting Standard Total, but may be overridden as necessary.

Notes on lot costing when using the Produce Assemblies function

Any variances will be posted to the "Inventory Adj." account specified on the Accounting > Options > Accounts Payable tab. When multiple items are being produced, the "Prod Assemblies Alloc." field on the Accounting > Options > Inventory tab is used to specify how costs will be allocated to the items being produced. The calculations for the available options are available in the link provided in the previous sentence.

Determining costs on Inter-Company Transfers

Most Inter-Company Transfers maintain Lot costs from the sending Facility to the receiving Facility, but there are several cases where Lot costs want to be marked up during the transfer process. Deacom has a variety of ways to mark up costs during the transfer process, controlled by the "IC Xfer Markup Type" field, and potentially the "Markup Factor", on the Sales tab of the receiving Facility. The "Markup Factor" defines the percentage or dollar amount that will be applied when receiving material and may be defined on both a Facility and a Part's Item Master General 2 tab via the "IC Trans Markup %" field. If factors are set in both fields, both of these amounts will be added when setting the cost of the inventory in the destination Facility.

Reviewing costs

The following reports are especially useful to review inventory, order, and job costs:

• Item Master Reporting "Costs" - Costing report that is able to display any of the item master costing fields. When modified to include all current and accounting cost fields, a good review report before pushing a large number of item costs from current to accounting standards.
• Item Master Reporting "Loaded Costs" - A second Costing report displaying item master costing fields.
• Item Master Reporting "Facility Costs" - Costing report that is able to display any of the facility tab costing fields

• Inventory Reporting "Cost Comparison" - Costing report that combines Item Master costing fields, from the Costs tab, with the calculated fields of "Last Cost" and "Average Cost", from the Costs 2 tab. This report allows the user to compare Lot costs to get a general sense of if they look accurate or are skewed.
• Inventory Reporting "Last Cost Rollup" - Costing report that combines item master costing fields with the calculated fields of last cost, average inventory cost, and the rolled up BOM cost with all components valued at their last cost. 
• Inventory Reporting "Lots" - System and User Lot-level detail, showing the quantity and value of each system lot. This report is a snapshot in time, so transaction dates are critical when analyzing the data. 
• Order Reporting (Purchasing) "Standard Variance" - PO line level detail report showing part numbers, quantities, purchase price, and standard cost.  Compare purchase price to standard before or after PO receipt.
• Order Reporting (Purchasing) "Invoice Variance" - PO line level detail report showing part numbers, quantities, purchase price, and standard cost.  Compare invoiced price to purchase price after invoicing.
• Purchase Price Variance (PPV) account - The PPV account is an expense account to which purchasing variations from standard cost are posted when operating in Standard Cost mode. The system default is set via Accounting > Options > Accounts Payable tab "Purchase Cost Var." field and used when new Parts are created. It is a best practice to review potential PPV impact prior to receiving Purchase Orders to limit large variances. This can be done by modifying the Purchasing "Order Detail" report grid layout to include the PPV amount on a per order basis. As another option, an Accounting "General Ledger Summary" report can be generated for the designated PPV account(s) to see what has already been booked.
• Order Reporting (Sales) "Cost Summary" - Costing report that displays the total Sales Order Cost, based on Item Master Costs tab fields for all Parts as well as Revenue. The matcost, totstanmat, labcost, and totstanlab calculated fields on this report only display values for Sales Orders linked to Jobs.
• Job Reporting "Job Cost Summary" - Summary report which displays the total unit, material, labor, and burden costs for each Job based on the selection criteria used in the pre-filter. 
• Job Reporting "Job Cost Detail" - Same as the Job Cost Summary, but for each line on the job.
• Job Reporting "Job Material Cost Detail" - Detailed report which displays the planned quantity, actual quantity, planned material cost, and actual material costs for each Part on the selected Jobs.
• Job Reporting "WIP Summary" - Job-level report showing the finished quantity together with the actual material, labor and burden costs versus the standard material, labor and burden.
• Job Reporting "WIP Detail" - Same as the WIP Summary, but for each line on the job.

Updating inventory costs

Companies running in Standard cost will often times need to update the Accounting Standard Costs on items, which is accomplished on individual items via the “Update Acct. Std” button on the Item Master Costs tab of the record. Alternatively, the Cost Updates function is used to accomplish this goal on multiple items simultaneously. This technique allows companies to update their costs after they have been reviewed on a periodic basis, perhaps monthly or quarterly. Note that there is no GL impact when updating standard costs using this transaction. This function can also be used to revalue inventory lot costs, which will have a GL impact resulting in a debit to inventory and credit to COGS Variance GL account, if for example the lot cost is increased.

Prior to performing the below process, users should perform an analysis on what items will have their costs changed. For example, it may be useful to run an Inventory "Lots" report to review and drill into what items would be changed and the current costs compared to the proposed updated costs. This analysis can be done per lot or date produced, by inventory segment (reserved, issued, in-transit, etc.), or any other comparison that may be useful for your company.

1. Determine which lots or Item Master records will be updated. Users may wish to use the Lots, Lot Summary, Lot Tracking Explosion, and/or Lot Tracking Implosion reports in the Inventory Reporting section of Deacom to research certain records or to assist with determining the range of lots or items that will be included in the update. These reports will also display lots returned to inventory via the shipment of Credit Memos.
2. Navigate to Inventory > Cost Updates.
3. Select an Update Type of "Lot Costs" or "Fixed Standard Costs".
   • Fixed Standard Cost option - mass push of current costs to become the accounting standard costs.
     • Review with Item Master > Costs report first
     • No GL effect
     • Inventory produced or purchased going forward will be at this standard
   • Lot Costs option - update lot costs to item master accounting standard costs.
     • Used after Fixed Standard Cost option to revalue inventory, if desired
     • One facility at a time, will not affect cost of lots in WIP or Transit
     • GL effect: If increasing Standard Cost - Debit inventory account, Credit inventory gain/loss account. If decreasing Standard Cost - Debit Inventory gain/loss account, Credit Inventory Account
4. Fill in the appropriate pre-filter selections then click "Apply".
5. The system will display a prompt confirming the function that is about to occur. Click "Yes" to confirm and complete the process.

If necessary, Lot costs can be updated for inventory segments other than regular inventory - this now includes Reserved and Issued material. Simply select an "Update Type" of "Lot Costs" then the desired inventory segment in the "Type" field.

• If updating In-Transit material costs, the GL postings will hit the Std. Inven. Gain/Loss (pr_invgain) and In-Transit (pr_xferchid) accounts.
• If updating WIP material costs, the GL postings will hit the Std. Inven. Gain/Loss (pr_invgain) and WIP Materials (pr_wipinv) accounts.

Click Expand if using the "Purchase Orders - Price Variance" option

The purpose of this option is to find the difference between the Lot cost and the current "Acct. Std. Total" cost for items such as milk that are priced after they are purchased. Instead of entering GL postings, the system will create Purchase Orders to account for the differences. The process and calculations involved with this update option are listed below. Note that this transaction should be done while there is no other Deacom activity. The process begins once the original PO for the item(s) has been received. If Facility Part Cross References exist that are flagged with "Use Costs", the system will use the Facility-specific (p3_fixstan) cost when using this option.

1. Navigate to Inventory > Item Master.
2. On the Costs 1 tab enter the appropriate values so that the Current Total is the current price of the item, for example milk. (Repeat as needed if multiple items are involved).
3. Click the "Update Acct Std" button.
4. Navigate to Inventory > Cost Updates.
5. Ensure the "Update Type" is set to "Purchase Orders - Price Variance", select start and end dates so that the appropriate Purchase Orders will be gathered and select any other pre-filters necessary such as "Part Starts With", "Category", etc. then click "Apply".
6. A prompt should appear indicating the number of POs that are about to receive updated pricing. Click "Yes".
7. At this point, the system will display a form showing Vendor, Facility, and a Total Difference column. The total difference is calculated as follows: (LotCost (fi_cost) - pr_fixstan or p3_fixstan) * quantity on the line. The grid also contains a "View Detail" button. When clicked or when a row in the grid is double clicked, an order detail grid appears with the grouped orders used for the calculations.
8. Verify the information appears correct and click the "Apply" button.
9. A pop up box will be presented displaying the new purchase order numbers that have been created. At this point the process is complete, but users should review the verification steps below.

Verification Of Order Updates

1. Navigate to Purchasing > Order Reporting.
2. Set the appropriate filters to view the POs that were created above. If, for example, the process was run for the current day, filter for POs created today.
3. Click "View" to display the POs.
4. The POs created as a result of the above process should be displayed. These POs will have one line with the extension equaling the total difference from the grid displayed in the above process.

Note: The system will use the purchase order line invoice price (pu_invoiceprice) , and not the standard cost, to update the lot costs for onhand inventory if the following conditions exist when using the "Purchase Orders - Price Variance" Update Type via Inventory > Cost Updates:

• If the system is in actual cost mode.
• If the lot was originally brought into inventory on a Purchase Order, the system will look at the PO that the lot was brought in on, and, if the lot cost (fi_cost) is still currently at the price it was received at (pu_price), then the system will check to see if the price in pu_invoiceprice is different from pu_price. If so, a value-only adjustment will be made for those lots using the pu_invoiceprice.

Click Expand if using the "Sales Orders - COGS Delta" option

The purpose of this option is to update the cost of Lots and shipped Lots based on the actual price of items that may be priced after Sales Orders are shipped. The most common example is milk, whose price is generally set on the 1st of the following month. The process is detailed below.

1. Navigate to Inventory > Cost Updates.
2. Select an "Update Type" of "Shipped Orders - COGS Delta" on the pre-filter.
3. Set any other necessary pre-filter selections then click "Continue".
4. At this point the system will find the total difference for the past month from Shipped SOs Lot costs and display a form showing COGS account, COGS Variance account, and Total Difference. Total Difference is calculated as:(LotCost (fi_cost) - pr_fixstan or p3_fixstan) * shipped quantity on the line. This information is grouped by revenue account (if multiple SO lines have the same revenue account, they will be added into the Total Difference).
5. Click the "Post GL" button. At this point, the results will then be posted to GL based on the COGs Variance account and COGS account of the Sales Order line. The posting date of the adjustment will match the date the inventory was shipped and the quantity applied is based on what was shipped, not ordered.

Notes:

• If the Part cost went up (resulting in a negative Total Diff), the COGS account will be debited and the COGS Variance will be credited.
• If the Part cost went down (resulting in a positive Total Diff), the COGS account should be credited and the COGS Variance should be debited.
• This option also includes non-stock Parts, which means Sales Orders for non-stock parts will be taken into account when using the Cost Updates form.

Changing inventory costs

The Price Updates transaction allows users to make cost and pricing changes to inventory on a large scale. The transaction can be used to change the cost fields on the item master record and/or the cost fields on the item facility tab. Users can select one or more criteria to affect the price change. This transaction is not used to update or change costs or pricing on an individual item. Individual changes are handled in the item master section of the system. The Price Updates transaction does not update special order parts or vendor part cross references. In addition to pricing changes the Price Updates transaction includes a feature to modify any field on the item master record, including facility specific item fields and item master user fields. The details regarding this option are covered in the Item Master modifications via a spreadsheet section on the Price Updates page. Note that whether using the pre-filter or spreadsheet option, raw material current cost field changes update current total cost and roll up through BOMs (if rollup cost from BOMs is set) to sub-assemblies and finished goods.

1. Navigate to Inventory > Price Updates.
2. In the change from field select the "Pre-filter" option.
3. In the Field to Update drop down box select the appropriate option. Choices are: All, Item Master Only and Item Master Facilities Only. Additional information regarding these options is available in the pre-filter section of the Price Updates page.
4. Fill in the pre-filter selections as desired. Be sure to indicate selections and values in the change field, change type, based on and factor fields.
5. Once all selections have been made click the "Continue" button to begin the Price Updates program.
6. The system will present a display form indicating the number of items that will be changed. Click "Yes" to confirm the changes.
7. The system will show the update status in the upper right hand side of the main Deacom form.
8. Once all pricing changes have been made the system will display a confirmation message indicated that all parts have successfully been updated.
9. Click "Ok" to complete the process.

Note: Once the change to inventory costs has been completed, users can review the results, then use the Inventory > Cost Updates transaction to push updated standards to become the new accounting standard costs.

How other costs are maintained

• List Sales Price - manually entered
• Purchase Price - manually entered
• Last Cost - calculated: Used in conjunction with the value in the "Last Cost Entries" field in Purchasing > Options tab to display (1) the last cost of this item based on the last receipt, if the field is set to 1, or (2) the weighted average cost of this item based on the last X receipts, if the field is set to a value greater than 1.
• Average Cost - calculated: "On Hand" balance via the Inventory Reporting On Hand report * fi_invcost) / sum ("On Hand" balance via the Inventory Reporting "On Hand" report.
• LIFO Cost - Manually entered