About Changing an Item's Cost Method

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 valuations differences between the old and new cost method or cost type.

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.

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 stock location or lot location record.

From Average to Specific:

Uses the value of the unit costs before this change was made.

From Average to Standard:

No change needed.

From LIFO to Average:

Calculates the total value of inventory and divides by the quantity on hand to determine the new unit cost.
Computes the change in cost and posts changes to inventory accounts and inventory adjustment.
Assigns the item unit cost and item Average unit cost to the new average (just calculated).
Deletes LIFO/FIFO stacks.

From LIFO to FIFO:

Resets the unit costs in the Items form to the most recent cost.

From LIFO to Specific:

Determines average unit cost of items in LIFO/FIFO stack. (This is the new Specific cost.)
Computes the change in cost and posts changes to inventory accounts and inventory adjustment.
Deletes LIFO/FIFO stacks.

From LIFO to Standard:

Deletes the LIFO/FIFO stack records.

From FIFO to Average:

Calculates the total value of inventory and divides by the quantity on hand to determine the new unit cost.
Computes the change in cost and posts changes to inventory accounts and inventory adjustment.
Assigns item unit cost and item Average unit cost to the new average (just calculated).
Deletes LIFO/FIFO stacks.

From FIFO to LIFO:

Resets the unit costs in the Items form to the most recent cost.

From FIFO to Specific:

Determines the average unit cost of items in the LIFO/FIFO stack. (This is the new specific cost.)
Computes the change in cost and posts changes to inventory accounts and inventory adjustment.
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 and Average costs.
Adjusts the cost of the old (specific) inventory up or down to the new Average cost.

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 record 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 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 record the accumulated quantity on hand from each stock location or lot location record.

From Specific to Standard:

Enters a zero 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 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 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 Item Stockroom Locations or the Lot Location records to the unit costs from the Items form.

About Changing an Item's Cost Method - Actual