Item Cost Update

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 the on-hand quantity of the item and creates journal entries to record the difference between the old and the new amounts.

Certain programs update the amount for cost methods 01 through 08. For example, the system updates the following amounts in this way:

• For last-in, or cost method 01, the system interactively updates this amount based on the last cost of the item at the time of receipt.

• For weighted average, or cost method 02, 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. You cannot use the weighted average cost method (02) for the sales/inventory cost method with stocking type C or R.

• For actual cost, or cost method 09, the system calculates the cost of the product that is built on a work order or rate schedule based on the actual hours that are used and the actual quantity of parts that are issued. The system updates the cost based on the most current information. You cannot use actual cost method (09) for the sales/inventory cost method with stocking type C or R.

The system also updates these costs:

• Last-in, purchasing, and lot costs are updated by the PO Receipts program (P4312).

• Purchasing cost is updated by the Voucher Match program (P4314).

If you create additional cost methods, you must update their amounts manually.

You can delete a cost method for an item if it is no longer applicable. If you try to delete the sales, inventory, or purchasing cost method, the system displays a warning message. The system does not delete the cost method, but assigns a zero cost for the cost method.