Updating Average Costs
For average cost organizations only, you can directly update the average cost of items to include additional costs, such as freight or invoice price variances. You can update one or more cost elements or levels (this and previous) individually or to the total unit cost. Any change made to the total unit cost is spread to all cost elements and levels in the same proportion as existed prior to the update.
- 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
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:
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.
Source types define origins for transactions.
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.
7. Select the item for the average cost update.
If these parameters are not set the Common group is used.
9. Update the total unit average cost. Do one of the following:
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.
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.
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.
See Also
Overview of Average Costing
Transaction Types
Defining and Updating Transaction Source Types
Defining Transaction Reasons