Reviewing Supplier Cost Performance

You might want to review the average unit cost you paid to a supplier for an item in each fiscal period (usually a month). You can compare this cost to the average cost for the item on purchase orders and the average cost at the time of receipt to determine whether the price remains consistent.

You can have the system calculate a percentage variance between the cost you paid for an item and another cost, such as the receipt cost. For example, if the supplier specified an average cost of 0.50 when you entered a receipt for an item but then billed you an average cost of 1.00, the system displays a 100-percent variance. In this case, you would probably determine why the variance exists. You use processing options to specify the cost to compare to the paid cost.

You can also review the inventory cost for an item. You specify the cost method that the system uses to determine the inventory cost, such as last-in, first-out (LIFO). Using this cost method, the inventory cost reflects the cost of the last item you received.

You can review costs for each receipt you entered in the fiscal period. For example, if an item had an average receipt cost of 10.00, you can review the cost for the item each time you entered a receipt, which might have been 9.00 at one receipt and 11.00 at another receipt.