About Changing an Item's Cost Method - Standard

This topic describes changing an item's cost method on the Item Costs form.
Note: Changing an item's cost method or cost type on the Item Costs form can cause the system to automatically post financial transactions that reflect the valuation differences between the old and new cost method or cost type.

If the change you make affects any of the five cost components of inventory, a debit or credit is made to the appropriate inventory account. A balancing entry is made to the Inventory Adjustment account.

When you change the cost type from "Actual" to "Standard," you should always run the Roll Current Cost to Standard Cost utility again.

From Average to LIFO:

  • Creates one LIFO/FIFO stack record for all stockroom locations that share the same set of material, labor, fixed overhead, variable overhead, and outside accounts, and whose quantity on hand is not equal to zero.
  • Assigns to the stack the accumulated quantity on hand from each stock location or lot/location record.
  • Indented Bulleted List

From Average to FIFO:

  • Creates one LIFO/FIFO stack record for all stockroom locations that share the same set of material, labor, fixed overhead, variable overhead, and outside accounts, and whose quantity on hand is not equal to zero.
  • Assigns to the stack the accumulated quantity on hand from each item stock location or lot location record.

From Average to Specific:

  • Assigns the Average unit costs to the item location.

From Average to Standard:

  • No change needed.

From LIFO to Average:

  • Calculates total value of inventory & divides by the quantity on hand to determine the new unit cost.
  • (No accounting changes)
  • Updates the item's average unit cost with the new average.
  • Deletes the LIFO/FIFO stacks.

From LIFO to Specific:

  • Determines the average unit cost of items in the LIFO/FIFO stack. (This is the new Specific cost.)
  • Deletes LIFO/FIFO stacks.

From LIFO to Standard:

  • Deletes the LIFO/FIFO stack records.

From FIFO to Average:

  • Calculates total value of inventory & divides by the quantity on hand to determine the new unit cost.
  • (No accounting changes.)
  • Updates the item's average unit cost with the new average.
  • Deletes LIFO/FIFO stacks.

From FIFO to Specific:

  • Determines average unit cost of items in LIFO/FIFO stack. (This is the new specific cost.)
  • Deletes LIFO/FIFO stacks.

From FIFO to Standard:

  • Deletes the LIFO/FIFO stack records.

From Specific to Average:

  • Computes the Average cost of items on hand.
  • Assigns this value to the item's unit costs & Average costs.

From Specific to LIFO:

  • Creates one LIFO/FIFO stack record for all stockroom locations that share the same set of material, labor, fixed overhead, variable overhead, and outside accounts, and whose quantity on hand is not equal to zero.
  • Assigns to the stack the accumulated quantity on hand from each stock location or lot/location record.

From Specific to FIFO:

  • Creates one LIFO/FIFO stack record for all the stockroom locations that share same set of material, labor, fixed overhead, variable overhead, and outside accounts, and whose quantity on hand is not equal to zero.
  • Assigns to the stack the accumulated quantity on hand from each stock location or lot/location record.

From Specific to Standard:

  • Assigns a zeros in the Item Stockroom Locations or the Lot Location Unit Cost fields.

From Standard to Average:

  • Assigns the item's Average unit costs and unit costs to what the Standard costs had been.

From Standard to LIFO:

  • Creates one LIFO/FIFO stack record for all the item stockroom locations that share the same set of material, labor, fixed overhead, variable overhead, and outside accounts, and whose quantity on hand is not equal to zero.

From Standard to FIFO:

  • Creates one LIFO/FIFO stack record for all the item stockroom locations that share the same set of material, labor, fixed overhead, variable overhead, and outside accounts, and whose quantity on hand is not equal to zero.

From Standard to Specific:

  • Assigns the unit costs on the stockroom location or the lot location records to the unit costs from the Item Costs form.
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