About Unit Costs

This topic describes unit costs.

Standard Unit Cost

The amount that appears in the Unit Cost/Standard Unit Cost field (located on the Items, Mult-Site Items, and Item Costs forms) for an item depends on the cost method which you have instructed the system to use for that item. The table below summarizes the storage and posting of costs for the available cost methods.


When Cost Method is...	The field label is...	The field contains
Average (Actual)	Unit Cost	The item's average cost, used for inventory valuation. This is the cost at which the item will next be issued. It is updated using a weighted cost calculation each time the item is received into inventory. You can also change it by changing the values on the Cost Maint tab on the Item Costs form.
LIFO/FIFO (Actual)	Unit Cost	The unit cost value is mostly informational. The actual costs being used for inventory valuation and issuing the item are being stored in the Item Stockroom Locations form. With these methods, the Unit Cost will show you the next cost at which the item will be issued. If using LIFO, this is the unit cost tied to the last record in the Item LIFO file for the item. If using FIFO, it contains the cost tied to the first record currently in that file.
Specific (Actual)	Unit Cost	The unit cost value is mostly informational. It contains the last cost at which the item had been received. You can view the valuation and issue costs for the item on the Costs tab on the Item Stockroom Locations form (if the item is not lot tracked) or on the Item Lot Locations form (if lot tracked). It is also the cost used if the item's on-hand inventory is driven negative. The system updates it each time a receipt into inventory is processed for the item (PO receipt, job move to stock, etc.).
Standard	Standard Unit Cost	The item's standard cost, used for inventory valuation and for posting to the General Ledger for all transactions that move the item in or out of inventory. For new items with on-hand inventory of 0 and which have had no material transactions (new items), you can enter a standard cost on the Cost Maint tab on the Item Costs form. Otherwise, you can change the standard cost only by running the Roll Current Cost to Standard Cost utility.

Current Unit Cost

The Current Unit Cost field maintains the cost for one unit of the item. The system automatically updates this field when you receive a purchase order or perform the Current BOM Cost Roll Up.

If you update the Current Unit Cost field on the Items or Multi-Site Items form (under Actual or Standard costing), the system calculates the Material cost on the Item Costs form using this calculation:

Material Cost = Unit Cost - Duty - Freight - Brokerage - Insurance - Local Freight

The system updates the Current Unit Cost field for purchased and manufactured items as follows:

Purchased Items

When "Average" displays in the Update Current Cost field on the Purchasing Parameters form, the Current Unit Cost field will contain the average purchase cost of the item. When you receive the item into stock using the PO Receiving function, the system calculates the new average cost and posts it to this field as follows:

AC = (OQOH * OAC) + (RQ * PUC) / (OQOH + RQ)

where:

AC = Average Cost
OQOH = Old Quantity On Hand
OAC = Old Average Cost
RQ = Receipt Quantity
PUC = Purchase Order Unit Cost

Note: If the Cost Method is "Average," the Unit Cost field contains the Average unit cost. Therefore, the Current Unit Cost field does not also need to contain the Average cost.

If you enter Last in the Update Current Cost field, the Current Unit Cost field contains the last cost at which you received the item through the Purchase Order Receiving function. When you process the Purchase Order Receiving transaction, the system posts the purchase order line item unit cost to the Current Unit Cost field.

If you enter None in the Update Current Cost field, the system will never automatically post values to the Current Unit Cost field.

Note: If you are using some type of Actual costing, you can use the Current Unit Cost field to maintain a Standard cost for the item. Simply enter a cost into this field manually. The system will never change the value you enter.

When you run the Current BOM Cost Roll Up utility, the system posts the value in this field for purchased items to the Unit Cost field on all material records for this item in all standard bills of material.

Manufactured Items

For all manufactured items, the Current Unit Cost field holds the result of the Current BOM Cost Roll Up utility. This utility calculates the rolled-up cost for each manufactured item using the current routing and bill of material for the item. It totals the material, tooling, fixture, run, setup, overhead, and outside costs, and posts the result to this field.

For sub-assembly items, the system posts the rolled-up amount to the Unit Cost field on all material records of any bill of material which include the sub-assembly item.

Where Unit Costs are Stored

These fields store the cost of each item:


Field	Form (cost tracking at item level)	Form (cost tracking at item/warehouse level )
Unit Cost/Standard Unit Cost	Items (held in total and display only)	Item/Warehouse (held in total and display only)
Current Unit Cost	Items (held in total and display only)	Item/Warehouse (held in total and display only)
Unit Cost	Item Costs (the cost detail components of the total cost)	Item/Warehouse Costs (the cost detail components of the total cost)
Current Unit Cost	Item Costs (the cost detail components of the total cost)	Item/Warehouse Costs (the cost detail components of the total cost)

The following fields control the way the system maintains, processes, and applies costs:


Field	Form (cost tracking at item level)	Form (cost tracking at item/warehouse level )
Post to Journals	General Parameters	General Parameters
Update Current Cost	Purchasing Parameters	Purchasing Parameters
Overhead Basis	Shop Floor Control Parameters	Shop Floor Control Parameters
Costs Based on Complete	Shop Floor Control Parameters	Shop Floor Control Parameters
Cost Type	Items	Item/Warehouse
Cost Method	Items	Item/Warehouse
Unit Cost/Standard Unit Cost	Items Item Costs	Item/Warehouse Item/Warehouse Costs
Current Unit Cost	Items Item Costs	Item/Warehouse Item/Warehouse Costs

Tracking Costs at the Item/Warehouse Level

By default, SyteLine allows for one cost per item, stored on the Items or Multi-Site Items form. However, you can also track item costs at the Item/Warehouse level, by selecting the Cost Items at Warehouse field on the Inventory Parameters form.

Caution:

After you select this field and save the record, it cannot be deselected.

After selecting this field, the same item can now have several costs, depending on which warehouse stores it. In areas where the concept of a warehouse is not applicable (for example, Item Pricing and ABC Analysis), the cost from the default warehouse is used.

The system will continue to support only one bill of material for an item. Consequently, the Current Operations and Current Materials forms will be associated with the default warehouse, which is defined on the Inventory Parameters form. Items that have a Source value of Manufactured, Purchased, or Transferred will accumulate costs from their sub-components, and those sub-component costs will come from the default warehouse, which is defined on the Inventory Parameters form.