Average Costing Setup

Follow these steps to implement Average costing in the system:

  1. Select the Post to Journal check box on the General Parameters form to have all transactions which affect inventory post to the G/L Inventory Distribution Journal. Clear the check box to suppress posting to the G/L those transactions which may affect inventory.
  2. Set the Cost Method field on the Items form , General tab to Average for all items. (Ideally, you will set this field at the time the items are added to the Items form).
  3. Set the Cost Type field on the Items form , General tab to Actual. The cost type defaults from the Cost Type field on the General Parameters form when adding new items.
  4. Enter the initial cost of each item into the Unit Cost field on the Item Costs form.
  5. You can maintain cost details for both unit cost and Current unit cost entities. When the beginning inventory balance is entered through the stock adjust transaction, the quantity entered is valued at the cost entered. If an item has no beginning inventory balance, zero may be left in the Unit Cost field for the system to update as the item is received into stock.
  6. If you have instructed the system to post inventory transactions to the G/L by selecting the Post to Journal check box on the General Parameters form, you must also set up the G/L account numbers which the system uses for this interface.
  7. Specify these account numbers in the the associated codes and parameters for costing purposes:
    • Product Codes - WIP Tab:

      Material

      Labor

      Fovhd

      Vovhd

      Outside

    • Product Codes - Misc Tab:

      Only one account is needed for:

      Inventory Adjustment

    • Product Codes - Applied Overhead Tab:

      Only one account is needed for each of the following:

      Matl Fovhd Applied

      Matl Vovhd Applied

      Note:  The Matl Fovhd Applied and the Matl Vovhd Applied accounts are required only when overhead is based on job material issues.
    • Departments:

      Fixed Ovhd Applied Acct

      Var Ovhd Applied Acct

      Direct Labor Applied Acct

      Work Centers - Costing Tab

      Fix Mach Ovhd Applied Acct

      Var Mach Ovhd Applied Acct

    • Distribution Accounts - Inventory Tab:

      Inventory

      Inventory Labor

      Inventory Fovhd

      Inventory Vovhd

      Inventory Outside

    • Distribution Accounts - Sales/COGS Tab:

      COGS Matl

      COGS Labor

      COGS Fovhd

      COGS Vovhd

      COGS Outside

    • Distribution Accounts - In-Transit Tab:

      In-Transit Material

      In-Transit Labor

      In-Transit Fovhd

      In-Transit Vovhead

      In-Transit Outside

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