Examples of Using Valuation Structures to Calculate Item Costs
Let's go through a few examples of how the cost accounting application maintains costs for an item using different valuation structures.
Assume that a cost organization stocks an item in four stores under two inventory organizations, as given in the table.
|
Cost Organization |
Inventory Organization |
Subinventory |
Lot |
Item |
Quantity |
Cost per Unit |
Total Cost |
|---|---|---|---|---|---|---|---|
|
CO-US |
Retail Store 1 |
Store 1A |
A |
Gadget A |
50 |
50 |
2500 |
|
CO-US |
Retail Store 2 |
Store 2B |
C |
Gadget A |
45 |
44 |
1980 |
|
CO-US |
Retail Store 2 |
Store 2A |
C |
Gadget A |
60 |
45 |
2700 |
|
CO-US |
Retail Store 1 |
Store 1B |
B |
Gadget A |
40 |
48 |
1920 |
Item Cost at Cost Organization Level
The application calculates and maintains the item cost at the cost organization level. It maintains one cost for the item across all inventory organizations in the cost organization. The table lists the cost distribution.
|
Valuation Structure |
Unit Average Cost |
|---|---|
|
Cost Organization |
46.67 |
Item Cost at Inventory Organization Level
The application calculates and maintains the item cost separately for each inventory organization in the cost organization. The table lists the cost distribution.
|
Valuation Structure |
Inventory Organization |
Unit Average Cost |
|---|---|---|
|
Cost Organization - Inventory Organization |
Retail Store 1 |
49.11 |
|
Cost Organization - Inventory Organization |
Retail Store 2 |
44.57 |
Item Cost at Subinventory Level
The application calculates and maintains the item cost separately for each subinventory in the cost organization. The table lists the cost distribution.
|
Valuation Structure |
Inventory Organization |
Subinventory |
Unit Average Cost |
|---|---|---|---|
|
Inventory Organization - Subinventory |
Retail Store 1 |
Store 1A |
50 |
|
Inventory Organization - Subinventory |
Retail Store 1 |
Store 1B |
48 |
|
Inventory Organization - Subinventory |
Retail Store 2 |
Store 2A |
45 |
|
Inventory Organization - Subinventory |
Retail Store 2 |
Store 2B |
44 |
Item Cost at Lot Level for Each Subinventory and Inventory
The application calculates and maintains the item cost separately for each lot under each subinventory and inventory organization. The table lists the cost distributions.
|
Valuation Structure |
Inventory Organization |
Subinventory |
Lot |
Unit Average Cost |
|---|---|---|---|---|
|
Inventory Organization - Subinventory - Lot |
Retail Store 1 |
Store 1A |
A |
50 |
|
Inventory Organization - Subinventory - Lot |
Retail Store 1 |
Store 1B |
B |
48 |
|
Inventory Organization - Subinventory - Lot |
Retail Store 2 |
Store 2A |
C |
45 |
|
Inventory Organization - Subinventory - Lot |
Retail Store 2 |
Store 2B |
C |
44 |
Item Cost at Lot Level for Each Inventory
The application calculates and maintains the item cost separately for each lot under each inventory organization. The table lists the cost distributions.
|
Valuation Structure |
Inventory Organization |
Subinventory |
Lot |
Unit Average Cost |
|---|---|---|---|---|
|
Inventory Organization - Lot |
Retail Store 1 |
Store 1A |
A |
50 |
|
Inventory Organization - Lot |
Retail Store 1 |
Store 1B |
B |
48 |
|
Inventory Organization - Lot |
Retail Store 2 |
Store 2A |
C |
44.57 |
|
Inventory Organization - Lot |
Retail Store 2 |
Store 2B |
C |
44.57 |