Average Cost evol./movement using Order Price rather than FIFO

SUGGESTED

Hi,

We've noticed a few funny jumps in our average costs. Please see the attached example.
Is this being calculated correctly?
The product is set the FIFO costing valuation method so not sure why it's using order price here and then decreasing so much.
Thanks,
Matthew
  • 0
    SUGGESTED

    Hi 

    The function average cost evol/movvement is to view the evolution of the average cost which is based on the order price. The calculation displayed in this screen doesn't care for FIFO cost at all.

    If you manage FIFO costing then I recommend you to use the FIFO cost mouvement inquiry (CONSSMF).

    Note: when the stock quantity goes by zero, it's totally normal that the AVC cost is jumping. Indeed, in your example on the 23/05 you have no starting stock so the average cost is only based on the new order price from your production tracking.

    Note2: big variation on the AVC can be explained by transaction enry error: for instance consuming 10 times more a component or when having a large % of scrap upon a production process.

  • 0 in reply to Julien Patureau

    as a reminder here is the formula to calculate the new Average unit cost (after a new stock receipt):

    The average unit cost doesn't change after a stock issue.

  • 0 in reply to Julien Patureau

    Hi Julien,

    Thank you, that makes much more sense.

    Perhaps I'm looking in the wrong place however. I want to understand the changes to Average cost, AVC on the ITMMVT Product-site totals table.

    Do you know the formula for this? 

    Thanks,

    Matthew

  • 0 in reply to Matthew Lingard

    Hi 

    It difficult to undersand the AVC evolution for a product which is not managed with AVC valuation method.

    Indeed, the problem is only current AVC is saved in the system (AVC field in table ITMMVT) so in such situation you would need to rebuilt the AVC amount after each transaction (following the formula above) in a report. Pay attention, that the order price used on issue transaction would be populated with FIFO value if the product is managed with FIFO method.

    I have done it in Excel with some manual work around the data extraction but with a satisfactory result. 

    If AVC is the value important to you, then why aren't using AVC valuation method on your products?