LIFO and FIFO Costing Setup

This topic describes the setup for LIFO and FIFO costing.

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

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.
Set the Cost Method field on the Items form General tab to LIFO or FIFO for all items. (Ideally, you would set this field at the time the items are added to the Items file).
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.
Specify 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 is created as the item is received into inventory.

If you specified Actual in the 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 are used for this interface. Listings of the account numbers and related codes and parameters that must be entered for costing purposes follow.

Product Codes - WIP Tab

WIP Material

WIP Labor

WIP Fixed Overhead

WIP Var. Overhead

WIP Outside Services

Product Codes - Miscellaneous Tab

Inventory Adjustment

Product Codes - 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.

Departments

Fixed Ovhd Applied Acct

Variable Ovhd Applied Acct

Direct Labor Applied Acct

Work Centers - Costing Tab

Fix Mach Ovhd Applied Acct

Var Mach Ovh Applied Acct

Distribution Accounts - Inventory Tab

Inventory Material

Inventory Labor

Inventory Fovhd

Inventory Vovhd

Inventory Outside

Distribution Accounts - Sales/COGS Tab

COGS Material

COGS Labor

COGS Fovhd

COGS Vovhd

COGS Outside

Distribution Accounts - In-Transit

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.