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• a new average cost - enter the new cost by cost element and level (and the new total unit cost is automatically calculated), or enter a new total cost (the amount of change will automatically be proportioned across all cost elements and levels); onhand inventory in all subinventories in the cost group will be revalued. If you are updating the cost of an item in common inventory, the cost of that item in intransit owned by the current organization will also be updated.

• the percentage change in the unit cost - select cost element(s) and level(s) to adjust up or down (and the new total unit cost will be automatically calculated), or adjust the total (the percentage change will automatically be applied to all cost elements and levels); onhand inventory in all subinventories in the cost group will be revalued.

• the value change by which onhand inventory is to be incremented or decremented - select cost element(s) and level(s) to be adjusted or adjust the total and the system will revalue onhand inventory by that amount and recalculate the item's average cost for the cost group. You cannot change the average cost in this way unless the item has quantity on hand.

Additional Information: Average cost update transactions are inserted into the Open Item Interface in Oracle Inventory. Update transaction details can be viewed using the Transaction Interface Details window. This window is accessed using the Cost Detail button from the Oracle Inventory Transaction Interface window. See: Viewing and Updating Transaction Open Interface.

Prerequisites

   Set the CST: Average Cost Option profile option. See: Cost Management Profile Options.

If you set this profile option to Inventory Only, you can update only the total unit costs. If you set this profile option to Inventory and Work in Process, you can update either the total unit cost, or costs by level and / or element, but not both.

   To update total unit average costs:

1. Navigate to the Update Average Cost window.

2. Select a transaction date.

You can select any date within an open period, up to and including the current date.

3. Select the Average cost update in the Type field.

4. Optionally, select a Source type for the transaction.

Source types define origins for transactions.

5. Select an average cost update Adjustment Account.

If you increase average costs, debit your subinventory accounts and credit the specified adjustment account. If you decrease average costs, the reverse adjustments are generated.

You must select an Adjustment Account even though it can be overwritten later.

6. If you are updating costs using a percentage change, enter a default to use as the percentage change for individual item costs.

7. Select the item for the average cost update.

8. Select a Cost Group.

If the Project References Enabled and Project Cost Collection Enabled parameters are set in the Organization Parameters window in Oracle Inventory, you can select a cost group. See: Organization Parameters Window and Defining Project Information.

If these parameters are not set the Common group is used.

9. Update the total unit average cost. Do one of the following:

• Enter a New Average Cost. This value cannot be negative. On-hand inventory in all subinventories and intransit are revalued.

• Enter a percentage change in the item's average cost. The item cost is updated by this percentage value. On-hand inventory in all subinventories and intransit is revalued.

• Enter the amount to increase or decrease the current on-hand inventory value. To decrease the value, enter a negative amount. However, you cannot enter a value that drives the inventory value negative.

On-hand inventory is revalued by this amount and the item's average cost is recalculated by dividing the on-hand quantity into the new inventory value. You cannot change the average cost value by this method unless the item has quantity on-hand.

The offset to the inventory revaluation in all cases above is booked to the average cost adjustment account(s) specified at the time the update is performed.

10. If you do not want to use the default material, material overhead, resource, overhead, and outside processing adjustment accounts for the current item, open the Accounts alternative region and override the defaults.

11. Open the Value Change alternative region and review the change in inventory value.

12. Optionally, open the Comments alternative region and enter a reason for the transaction. Use a reason code to classify or explain the transaction.

13. Optionally, enter up to 240 characters of reference text.

14. Optionally, choose the Cost Elements button to update average costs by element level.

   To update average costs by element and / or level:

Note: This section is only relevant if you set the CST: Average Cost Option to Inventory and Work in Process.

1. Navigate to the Cost Elements window. Do this by choosing the Cost Elements button from the Update Average Costs window.

2. For each level and / or element, do one of the following:

• Enter a New Average Cost. On-hand inventory in all subinventories and intransit is revalued.

• Enter a percentage change in the item's average cost. The item cost is updated by this percentage value. On-hand inventory in all subinventories and intransit is revalued.

• Enter the amount to increase or decrease the current on-hand inventory value. On-hand inventory is revalued by this amount and the item's average cost is recalculated by dividing the on-hand quantity into the new inventory value. You cannot change the average cost value by this method unless the item has quantity on-hand.

The offset to the inventory revaluation in all cases above is booked to the average cost adjustment account(s) specified at the time the update is performed.

3. Save your work.

See Also

Transaction Types

Defining and Updating Transaction Source Types

Defining Transaction Reasons