Historic actual costs – common, no config settings

Requirement

For raw materials, historic actual costs are calculated at period end. Calculation is based on the closing balances, and the cost of the previous period and received goods using the most recent invoiced cost of the current period.

For operations, historic actual costs are recalculated based on the actual outcome and the actual cost of cost centers and work centers during a period.

Based on these historic actual costs for raw materials and operations, the semifinished goods and the finished goods are recalculated according to the product structure.

Historic actual costs are used for inventory valuation and the cost of sold goods.

M3 solution

M3 supports the calculation of historic actual costs for raw materials following these principles:

Rolling average
Period average
LIFO
FIFO

Historic actual costs can be calculated per date or date range.

For operations, historic actual costs can be calculated by M3 CAC cost center accounting functions.

The calculation result for semi-finished and finished goods is stored on item level but not on lot number level.

Optionally, historic actual costs can be used for inventory valuation.

Variances can be followed up using additional accounting transactions for internal accounting. Alternatively, a separate new set of accounting transactions using historic actual costs for a periodic accounting approach can be created.

Configuration guidelines

Not applicable.