LIFO and FIFO Costing Setup

Follow these steps to implement either LIFO or FIFO inventory cost method:

  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 LIFO or FIFO for all items. (Ideally, you will set this field at the time the items are added to the Items file).
  3. Set the Cost Type field on the Items form, General tab to Actual. The cost type default value comes from the Cost Type field on the Inventory Parameters form when adding new items.
  4. Enter the initial cost for the item into the Unit Cost field in the Items form at the time the item is added to the file.
    Note:  When the beginning inventory balance is entered by way of a stock adjust transaction, a record is created in the Item LIFO file with the current date, time, quantity, and the cost that is entered. If an item has no beginning inventory balance, leave a zero in each of the Unit Cost Detail fields and a LIFO/FIFO stack will be created as the item is received into inventory.
  5. If you have entered Actual in the parameter default Cost Type field, and selected the Post to Journal check box to indicate that the manufacturing modules are to post inventory transactions to G/L, you must also set up the G/L account numbers that the system uses for this interface. Specify this information for costing purposes:
    • On the Product Codes form WIP Tab:
      • WIP Material
      • WIP Labor
      • WIP Fixed Overhead
      • WIP Var. Overhead
      • WIP Outside Services
    • On the Product Codes form Miscellaneous Tab, set Inventory Adjustment.
    • On the Product Codes form Applied Overhead Tab:
      • Matl Fovhd Applied
      • Matl VOvhd Applied
      Note:  The Fixed Material Overhead Applied and the Variable Material Overhead Applied accounts are required only when overhead is based on job material issues.
    • On the Departments form:
      • Fixed Ovhd Applied Acct
      • Variable Ovhd Applied Acct
      • Direct Labor Applied Acct
    • On the Work Centers form Costing Tab:
      • Fix Mach Ovhd Applied Acct
      • Var Mach Ovh Applied Acct
    • On the Distribution Accounts form Inventory Tab:
      • Inventory Material
      • Inventory Labor
      • Inventory Fovhd
      • Inventory Vovhd
      • Inventory Outside
    • On the Distribution Accounts form Sales/COGS Tab:
      • COGS Material
      • COGS Labor
      • COGS Fovhd
      • COGS Vovhd
      • COGS Outside
    • On the Distribution Accounts form In-Transit Tab:
      • In-Transit Material
      • In-Transit Labor
      • In-Transit Fovhd
      • In-Transit Vovhd
      • In-Transit Outside
Note:  You are allowed to delete any distribution account record, including the default distribution account with a blank warehouse and blank product code.
Related topics