Minimum Version Required: 25.08
Pre-Conditions
Must be using Average Costing method. This guide is not applicable for customers using the FIFO (First-In, First-Out) costing method.
Requires Purchase Cost Edit permission to access and execute cost adjustment dashboards.
The costing error must be related to a raw material or packaging product from a vendor purchase.
Steps
Identify the Problematic Product: First, identify the specific raw material or packaging product that has an incorrect average cost.
Reset the Average Cost: Use the Average Cost Adjustment (ACA) dashboard. Select the product and input the new, correct average cost that should be used moving forward. This action creates a purchase record to reset the
Inventories.AvgLaidinCost.Note: This step does not re-value on-hand inventory. It only corrects the average cost on the inventory record to prevent the bad average from affecting future production orders.
Recalculate WIP Products: Return to the ACA dashboard and search for all Work-in-Progress (WIP) products that consumed the raw material or packaging product you just adjusted. Recalculate these production orders to update their costs.
Recalculate Finished Goods (FGs): Repeat the process from the previous step for any finished goods (FGs) that consumed the adjusted raw material.
Perform Manual Revaluation: Unlike the FIFO method, there is no automatic adjustment invoice created for previously sold inventory. You must perform a manual revaluation to true up the cost of any inventory that was sold at the incorrect average cost.
Fields And Definitions
Average Costing: An inventory valuation method where the cost of goods sold and the ending inventory are valued at the weighted average cost of all inventory available for sale.
Inventories.AvgLaidinCost: A system field that stores the weighted average cost of a particular inventory item.Work-in-Progress (WIP): Partially completed goods that are still in the production process.
Finished Goods (FG): Products that are completed and ready for sale.
Manual Revaluation: A process of manually adjusting the value of inventory in the accounting system to reflect a new, correct cost.
Best Practices
Use with Extreme Discretion: This dashboard is designed for handling large-scale production order recalculations stemming from a significant and material costing error.
Manual Revaluation is Required: Always remember that a manual revaluation is necessary to correct costs for previously sold inventory, as this tool does not automate that process for average costing.
Proactive Cost Management: The most effective way to avoid these issues is to ensure that vendor purchase costs are entered accurately from the start.