Per Costing Method

Cost is calculated based on the costing method assigned to the item. For example: LIFO, FIFO, standard, average, and so on.

The costs are sourced from the items in the sequence outlined in the table. For example, refer to row 1 in the below table. An assembly item will source by item location average cost if the value is greater than 0. Else, it moves to the next source (item location last purchase price) and checks if the value is greater than 0. It then goes to the next source (Item purchase price) and checks if the value is greater than 0. If none of the source types provide a value greater than 0, then the price of the assembly item will be 0.

Note:

If the Top Level Only field is not checked, the costs for the assembly item are sourced and aggregated from the component items in the exploded bill of materials.

Regardless of the costing method, the initial average cost for assembly or inventory items applies to all first transactions, except those resulting in underwater inventory. For assembly items, the Top Level Only box setting determines whether the initial cost is sourced from the assembly item or its component items. To set the initial average cost on item records, see Initial Average Cost or Costing.

Item Type	Top Level	Costing Method	Cost Source
Assembly item or inventory item	Yes	Group Average Average	Item location average cost Item location last purchase price Item purchase price
Standard	For assembly item, the cost is a summation of component item cost. For inventory item, the cost is based on item location standard cost. Item location average cost Item location last purchase price Item purchase price
Lot Numbered Specific Actual FIFO LIFO, and so on.	For assembly item, the cost is a summation of component item cost. For inventory item, the cost is based on item location default cost. Item location average cost Item location last purchase price Item purchase price
Inventory item	No	Group Average Average	Item location average cost Item location last purchase price Item purchase price
Standard	Item location default cost Item location average cost Item location last purchase price Item purchase price
Lot Numbered Specific Actual FIFO LIFO, and so on.	Item location default cost Item location average cost Item location last purchase price Item purchase price

Item Type

Top Level

Costing Method

Cost Source

Assembly item or inventory item

Yes

Group Average

Average

Item location average cost
Item location last purchase price
Item purchase price

Standard

For assembly item, the cost is a summation of component item cost.

For inventory item, the cost is based on item location standard cost.
Item location average cost
Item location last purchase price
Item purchase price

Lot Numbered

Specific

Actual

FIFO

LIFO, and so on.

For assembly item, the cost is a summation of component item cost.

For inventory item, the cost is based on item location default cost.
Item location average cost
Item location last purchase price
Item purchase price

Inventory item