Average Costing Setup
This topic describes the setup for average costing.
Use these steps to implement Average costing in the system:
- 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 General tab of the Items form to Average for all items. Ideally, you would set this field at the time the items are added to the Items form.
- Set the Cost Type field on the General tab of the Items form to Actual. The cost type defaults from the Cost Type field on the General Parameters form when adding new items.
- Specify the initial cost of each item into the Unit Cost field on the Item Costs form.
- You can maintain cost details for both unit cost and current unit cost entities. When the beginning inventory balance is entered through the stock adjust transaction, the quantity entered is valued at the cost entered. If an item has no beginning inventory balance, zero may be left in the Unit Cost field for the system to update as the item is received into stock.
- If you have instructed the system to post inventory transactions to the G/L by selecting the Post to Journal check box on the General Parameters form, you must also set up the G/L account numbers which the system uses for this interface.
These account numbers must be entered into the associated codes and parameters for costing purposes:
Product Codes - WIP Tab
Material
Labor
Fovhd
Vovhd
Outside
Product Codes - Misc Tab
Only one account is needed for:
Inventory Adjustment
Product Codes - Applied Overhead Tab
Only one account is needed for each of these:
Matl Fovhd Applied
Matl Vovhd Applied
Note: The Matl Fovhd Applied and the Matl Vovhd Applied accounts are required only when
overhead is based on job material issues.
Departments
Fixed Ovhd Applied Acct
Var Ovhd Applied Acct
Direct Labor Applied Acct
Work Centers - Costing Tab
Fix Mach Ovhd Applied Acct
Var Mach Ovhd Applied Acct
Distribution Accounts - Inventory Tab
Inventory
Inventory Labor
Inventory Fovhd
Inventory Vovhd
Inventory Outside
Distribution Accounts - Sales/COGS Tab
COGS Matl
COGS Labor
COGS Fovhd
COGS Vovhd
COGS Outside
Distribution Accounts - In-Transit Tab
In-Transit Material
In-Transit Labor
In-Transit Fovhd
In-Transit Vovhead
In-Transit Outside