Moving Average Unit Cost (MAUC)

The Moving Average Unit Cost (MAUC) is an inventory valuation method that is used for accounting purposes.

The MAUC is the average value for each unit of the current inventory. Inventory is valued against the average receipt price. For each new receipt, the MAUC is updated.

To calculate the inventory value for an item, the MAUC inventory valuation method uses all types of transactions, such as the following:

Purchase
Production
Service
Inventory transfer
Inventory adjustment

When goods are received resulting from a transaction, the receipt price is used to update the MAUC value.

The MAUC is calculated as follows:

(Existing inventory on hand * Existing MAUC) + (receipt quantity * transaction price)/(Existing inventory on hand + receipt quantity)

Example

If the following transactions are carried out, the MAUC value is calculated as follows:

Trans- action	Transaction type	Item quantity	Price per item	MAUC	Calculation
1	Receipt	10	EUR 10	EUR 10	(10 * 10) / 10 = 10
1	Receipt	10	EUR 10	EUR 10	In this case, no existing inventory on hand and no existing MAUC is available.
2	Receipt	10	EUR 16	EUR 13	(10 * 10) + (10 * 16) / (10 + 10)
3	Issue	10	EUR 13	EUR 13	(20 * 13) - (10 * 13) / (20 - 10)
3	Issue	10	For issues, the latest MAUC is taken as the valuation price.	EUR 13	Issues do not affect the MAUC. The MAUC calculated for the issue transaction is the same as the MAUC for the previous receipt transaction.
4	Receipt	5	EUR 18	EUR 14.67	(10 * 13) + (5 * 18) / (10 + 5)
5	Issue	6	EUR 14.67	EUR 14.67	(15 * 14.67) - (6 * 14.67) / (15 - 6)

MAUC corrections

MAUC values require correction if they are based on incorrect transaction prices. For example, if an incorrect purchase price is used for a receipt of goods, the MAUC is updated against this incorrect purchase price. You can correct the transaction price by correcting the receipt price of the purchase order. The MAUC value will be adjusted as long as the goods received are still financially present in the warehouse. In addition to purchase transactions, other types of transactions can have an impact on inventory levels and therefore influence MAUC values. For these transactions too, wrong transaction prices can be entered, which result in wrong MAUC values.

If the MAUC value has become incorrect as a result of a few wrong transaction prices, MAUC correction is probably only required for a limited number of items. In the MAUC Correction by Item (whina1231m000) session, you can correct the MAUC value of an individual item. If a large number of items have wrong MAUC values due to, for example, system implementation failures, you can correct MAUC values for ranges of items in the Actual Costs Correction (whina1230m000) session.

When the corrected MAUC value is updated for an item, LN performs the following process:

Update the new MAUC value in the Item Inventory - Cost Details (whwmd2517m000) session.
Create a record for the new MAUC value in the Inventory Receipt Transactions (whina1512m000) session and the Inventory Receipt Transaction - Cost Details (whina1513m000) session.
Create a financial transaction of the Revaluation type in Financials to justify the MAUC correction. The transaction origin of this transaction is Revaluation Order.
Create a revaluation order in the Inventory Revaluation Transactions (whina1522m000) session. The revaluation order is provided with a reason code explaining the reason for the revaluation.