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