5 Enter Item Cost Information

This chapter contains these topics:

• Section 5.1, "Entering Item Cost Information"

• Section 5.2, "Assigning a Cost Level to an Item"

• Section 5.3, "Assigning a Cost Method to an Item"

• Section 5.4, "Entering Item Costs"

• Section 5.5, "Entering Manufacturing Setup Cost Information"

You must provide item cost information for the system to track inventory costs. This information determines:

• Whether the system maintains one overall cost for the item or a different cost for each branch/plant

• Which cost method the system uses to track inventory costs

• Which cost method the system uses for purchase orders

You can also add prorated setup costs for manufacturing.

5.1 Entering Item Cost Information

For each cost method you assign to an item, you must also specify a cost. For example, to use the last-in, first-out (LIFO) cost method for an item, you must enter an initial cost for that cost method. The system updates the LIFO cost based on the cost of the item as of the last receipt date.

Item Master Information (P4101) supports import functionality. Cost Revisions (P4105) supports import/export functionality. See the JD Edwards World Technical Tools Guide for more information.

The system stores inventory cost records in the Cost Ledger table (F4105).

See Also:

• Section 27.2, "Updating Costs for an Item across Multiple Branch/Plants"

• Section 27.3, "Updating Costs for Multiple Items across Multiple Branch/Plants"

• Section 27.4, "Updating Average Costs for Items"

• Section 27.5, "Updating Current Item Costs with Future Costs"

• Work with PC Import/Export in the JD Edwards World Technical Tools Guide

5.2 Assigning a Cost Level to an Item

From Inventory Management (G41), choose Inventory Master/Transactions

From Inventory Master/Transactions (G4111), choose Item Master Information

You determine whether the system maintains one overall cost for an item or a different cost for each branch/plant. The system can also maintain a different cost for each location and lot within a branch/plant. The cost level that you assign to an item indicates the level at which the system maintains costs.

Costs are not currency-based. The value of an item's cost lies in the base currency of the company to which the item belongs. For this reason, costs in multi-currency are set at the item/branch or item/branch/location levels.

You can also indicate the table for the system to retrieve an item cost from for an item that is used when you enter a purchase order. The purchase price level you specify for an item indicates which of the following costs to use:

• The inventory cost for the item, which the system stores in the Cost Ledger table (F4105)

• The supplier's cost for the item, if supplier costs are set up in the Purchase Price table (F41061)

To assign a cost level to an item

On Item Master Information

Complete the following fields:

• Inventory Cost Level

• Purchase Price Level

Field	Explanation
Inventory Cost Level	A code that indicates whether the system maintains one overall inventory cost for the item, a different cost for each branch/plant, or a different cost for each location and lot within a branch/plant. The system maintains inventory costs in the Inventory Cost table (F4105). Valid codes are: 1 – Item level 2 – Item/Branch level 3 – Item/Branch/Location level
Purchase Price Level	A code that indicates where to retrieve the purchase price for an item when you enter a purchase order. Valid codes are: 1 – Use the supplier/item price from the Purchase Price table (F41061). 2 – Use the supplier/item/branch price from the Purchase Price table (F41061). 3 – Use the inventory cost from the Inventory Cost table (F4105). This cost is based on the inventory cost level and the purchasing cost method you specify for the item. The first two codes are applicable only if you set up supplier costs in the Purchase Management system. If you do not set up supplier costs, the system uses the inventory cost as the default for the purchase order.

5.2.1 What You Should Know About

Topic	Description
Locating an item to assign cost methods and costs	The cost level you enter for an item determines how you locate the item to assign cost methods and enter item costs. For example, you locate the item based on: The item The item and branch/plant The item, branch/plant, and location

See Also:

• Define Supplier Prices and Discount Rules in the JD Edwards World Procurement Guide

5.3 Assigning a Cost Method to an Item

From Inventory Management (G41), choose Inventory Master/Transactions

From Inventory Master/Transactions (G4111), choose Item Master Information

You must specify the cost method that the system uses to determine an item's cost for:

• Sales and costs of goods sold

• Purchase orders

For example, you can use the weighted average cost method to determine the cost of goods sold for an item, and the last-in cost method to determine the item's unit cost for purchase orders.

The system provides eight predefined cost methods:

• Last-in

• Weighted average

• Memo

• Current

• Future

• Lot

• Standard

• Purchasing - base cost, no adds

In addition to these methods, you can define your own cost methods with user-defined codes.

You can enter cost methods for items when you enter either item master information or item branch information.

To assign a cost method to an item

On Item Master Information

1. Choose Cost Revisions (F6).

   Figure 5-1 Cost Revisions screen

   
   Description of "Figure 5-1 Cost Revisions screen"
   
   

2. On Cost Revisions, complete the following fields:

   • Sales/Inventory

   • Purchasing

Field	Explanation
Sales/Inventory	A user-defined code (system 40/type CM) that indicates the cost method that the system uses to determine the cost of the item for purchase orders. Cost methods 01-08 are hard-coded. Form-specific information If you maintain costs at the item level, the system retrieves the default value for this field from the data dictionary. If you maintain costs at the item and branch/plant level, the system retrieves the default value from Branch/Plant Constants.
Purchasing	A user-defined code (system 40/type CM) that indicates the cost method that the system uses to calculate the cost of goods sold for the item. Cost methods 01-08 are hard-coded. Form-specific information If you maintain costs at the item level, the system retrieves the default value for this field from the data dictionary. If you maintain costs at the item and branch/plant level, the system retrieves the default value from Branch/Plant Constants.

5.3.1 What You Should Know About

Topic	Description
Assigning a cost method without specifying a cost	If you do not enter an item cost for the cost methods you assign to sales, inventory, or purchasing, the system displays a warning message. If you ignore the warning, the system assigns a zero cost for the cost method.
Reserved cost methods	JD Edwards World reserves cost methods 01 - 19. For more information, see Section 5.4, "Entering Item Costs" in the Product Costing and Manufacturing Accounting Guide.
Weighted average cost	The formula for calculating weighted average cost uses quantity on hand. Caution: Do NOT use the weighted average cost method in an environment where negative on-hand quantities are possible.

5.4 Entering Item Costs

From Inventory Management (G41), choose Inventory Master/Transactions

From Inventory Master/Transactions (G4111), choose Item Master Information

You establish costs for an item by entering an amount for each cost method. When you review costs for the item, the system displays only those methods that you entered an amount.

To enter item costs

On Item Master Information

1. Choose Cost Revisions (F6).

2. On Cost Revisions, complete the following field for each applicable cost method:

   • Unit Cost

Field	Explanation
Unit Cost	The amount per unit (the total cost divided by the unit quantity). Form-specific information The cost for one unit of this item, based on the corresponding cost method.

5.4.1 What You Should Know About

Topic	Description
Changing unit costs	You can change the amount for any cost method at any time. For example, if you change the amount for the cost method that you use to track costs of goods sold, the system applies the new amount to your on-hand quantity of the item. It also creates journal entries to record the difference between the old and the new amounts.
Updating unit costs	Certain programs update the amount for cost methods 01 - 08. For example, the system updates last-in and weighted average amounts as follows: Last-in - The system interactively updates this amount based on the last cost of the item at the time of receipt. Weighted Average - The system calculates and updates this amount by adding transaction quantities together, adding transaction costs together, and dividing the total cost by the total quantity. Also, the system updates the following costs: Last-in, Purchasing, and Lot - The Receipts program updates these costs. Purchasing - The Voucher Match program updates this cost. If you create additional cost methods, you must update their amounts manually.
Deleting a cost method	You can delete a cost method for an item if it is no longer applicable. If you try to delete your sales, inventory, or purchasing cost method, the system displays a warning message. The system does not delete the cost method, but updates it to a zero cost.

5.5 Entering Manufacturing Setup Cost Information

From Inventory Management (G41), choose Inventory Master/Transactions

From Inventory Master/Transactions (G4111), choose Item Master Information

If you use JD Edwards World Manufacturing systems, you can prorate setup costs for an item based on the quantity of the item that you plan to produce.

To enter manufacturing setup cost information

On Item Master Information

1. Choose Manufacturing Values Entry (F10).

   Figure 5-2 Manufacturing Values Entry screen

   
   Description of "Figure 5-2 Manufacturing Values Entry screen"
   
   

2. On Manufacturing Values Entry, complete the following field:

   • Accounting Cost Qty

Field	Explanation
Accounting Cost Qty	An amount that the system uses in the cost rollup program to determine the allocation of setup costs. The system totals the setup costs and divides the sum by this quantity to determine a unit setup cost. The default is 1.

5.5.1 Processing Options

See Section 56.1, "Item Master Revisions (P4101)"